Court of Appeal (Qld)|2005-10-21|Before: McMurdo P, Keane JA and Douglas JSeparate reasons, for judgment of each member of the Court, each concurring as to the orders, made
McMurdo P, Keane JA and Douglas JSeparate reasons, for judgment of each member of the Court, each concurring as to the orders, made
Catchwords
APPEAL AND NEW TRIAL - APPEAL – GENERAL PRINCIPLES - POINTS AND
OBJECTIONS NOT TAKEN BELOW - WHEN NOT ALLOWED TO BE RAISED ON
APPEAL - QUESTIONS
NOT RAISED ON PLEADINGS OR IN ARGUMENT - GENERALLY - where appellant claimed to
Source
Original judgment source is linked above.
Catchwords
APPEAL AND NEW TRIAL - APPEAL – GENERAL PRINCIPLES - POINTS ANDOBJECTIONS NOT TAKEN BELOW - WHEN NOT ALLOWED TO BE RAISED ONAPPEAL - QUESTIONSNOT RAISED ON PLEADINGS OR IN ARGUMENT - GENERALLY - where appellant claimed tohave been appointed as the trusteeof a trust owing a debt to a company that hadbeen placed in liquidation - where this debt, along with others, had beenwritten offunder a settlement deed entered into between the trust, the otherrespondents and the liquidators - where the appellant had soughtorders at firstinstance to direct the liquidators to pursue these debts notwithstanding thesettlement deed - where, on appeal,the appellant only sought a declaration tothe effect that he was not personally indebted to the company being liquidated -whetherthe learned primary judge erred in not making the declaration that theappellant was not personally indebted to the company - whetherthe contention
that the appellant was not personally indebted had ever been litigated below -
whether any other error had been shown
in the decision of the learned primary
judge
APPEAL AND NEW TRIAL - APPEAL – PRACTICE AND PROCEDURE - QUEENSLAND -
POWERS OF COURT - COSTS - where the respondents sought
an order that the
appellant pay their costs of the appeal on the indemnity basis - whether the
conduct of the appeal by the appellant
had been so unreasonable as to justify an
award of costs on the indemnity basis
Corporations Act 2001 (Cth), s 511Supreme Court Act 1995
(Qld), s 253Uniform Civil Procedure Rules 1999 (Qld), r 766
Judgment (37 paragraphs)
[1]
MacGillivrays, acting as Town Agents for Maxwell & Co (Lismore), for the respondents to the appeal
[2]
[1] McMURDO P: I agree with the orders proposed by Keane JA and with his reasons.
[3]
[2] KEANE JA: Messrs Sweeney and van der Velde ("the liquidators") are liquidators of Kendell's (NSW) Pty Ltd ("the company"). They were not originally parties to the appeal. At the outset of the hearing, the appellant applied for the joinder of the liquidators as respondents to the appeal. In my view, the appeal may be disposed of on a basis which makes it unnecessary to resolve that application. The respondents to the appeal are contributories of the company. They are also the sisters of the appellant. The appellant claimed at first instance to be the trustee of the WGK Trust and, as such, a contributory of the company. As will appear, that claim is controversial. On the assumption that that claim was well-founded, the appellant applied pursuant to s 511 of the Corporations Act2001 (Cth) for declarations and consequential orders in relation to the state of the indebtedness to the company of the WGK Trust and his sisters. Shortly put, the appellant's contentions were that, as trustee of the WGK Trust, he is not indebted to the company, but his sisters are indebted to it, and that the liquidators of the company should conduct the winding up of the company accordingly.
[4]
[3] On 17 March 2005, the learned primary judge refused to make the declarations and orders sought by the appellant.[1] The only substantive issue which the appellant sought to agitate on appeal relates to the indebtedness of the WGK Trust to the company. Before turning to address this issue it is necessary to dispose of a preliminary matter involving the costs orders that were made after the conclusion of the proceedings at first instance.
[5]
[4] The learned primary judge ordered the appellant to pay three-quarters of the costs of the respondents other than the liquidators. Both the appellant and the respondents (other than the liquidators) seek to appeal against his Honour's orders as to costs. In this regard, the appellant seeks leave to amend his notice of appeal, and the appellant's sisters have applied for orders varying the costs orders made by his Honour. As Mr Sweeney of Counsel, who appeared for the respondents, correctly pointed out, the attempts by the parties to appeal against his Honour's order as to costs are incompetent. That is because, contrary to s 253 of the Supreme Court Act 1995 (Qld), leave to appeal against that order was neither sought nor obtained from his Honour.[2] Accordingly, it is not necessary to say any more for the present about the challenges to his Honour's order as to the costs of the proceedings at first instance.
[6]
[5] As to the principal relief which the appellant sought at first instance, the issues between the appellant and his sisters related to loans to both the WGK Trust and to the appellant's sisters recorded in the books of the company for the 1987 and 1988 financial years. At that time, the company was a member of a group of companies controlled by the appellant's father, Mr Kendell Snr. Mr Kendell Snr also controlled a company, Joymar Pty Ltd ("Joymar"), in which he owned all the shares. Mr Kendell Snr and Joymar owned all the shares in the company. Joymar was, at the time of the death of Mr Kendell Snr in February 1994, the trustee of the WGK Trust. The WGK Trust is a discretionary trust of which the appellant is a beneficiary.
[7]
[6] Mr Kendell Snr left all his shares in the company and all his shares in Joymar to his daughters or persons associated with them. No provision was made for the appellant in the will of Mr Kendell Snr. The appellant is not a creditor of the company. Apart from his claim that he is the trustee of the WGK Trust, he has no basis for asserting that he has any interest in the winding up of the company.
[8]
[7] At first instance, the appellant claimed that the debt of $278,733 recorded as owing by the WGK Trust to the company is, in truth, not owing because there was no loan to the WGK Trust, the book entry recording that loan being a sham. His Honour rejected that claim, but also held that he would not have made the declaration sought by the appellant in any event because he was not satisfied that the appellant was truly the trustee of the WGK Trust.[3]
[9]
[8] As to this latter point, the executors appointed by the will of Mr Kendell Snr were M J Bryant and P G Bryant. By a deed dated 9 September 1995, Messrs Bryant purported to appoint Australian Vineyard Estates Pty Ltd, a company controlled by the appellant, as trustee of the WGK Trust. By virtue of a memorandum signed by Messrs Bryant dated 5 August 2002, the appellant claimed to have been appointed trustee of the WGK Trust.
[10]
[9] The appellant was not able to put into evidence the trust deed establishing the WGK Trust pursuant to which he asserted that Messrs Bryant had purported to exercise the power to appoint the appellant as the trustee of the WGK Trust. The appellant gave evidence that he had drafted the trust deed and that it included a provision to the effect that:
[11]
"the trustee could be removed and a new trustee appointed by memorandum in writing from the Principal [Mr Kendell Snr] and in the event of his death from [sic] his executors".
[12]
[10] The learned primary judge rejected the appellant's evidence as to the terms of the WGK Trust deed. His Honour regarded the appellant's evidence as unreliable.[4] The terms of the WGK Trust were relevant only as a foundation for establishing that the appellant was, at this time, the trustee of the WGK Trust. His Honour rejected the contention that the appellant was the trustee of the WGK Trust. Not the least of the reasons why his Honour was plainly entitled to take that view (apart from his rejection of the appellant's secondary evidence of the contents of the WGK Trust Deed) was that the appellant wrote a letter to the respondents' solicitors on 26 March 2004, in which he said: "... I have been removed as trustee of the WGK Trust and DWK Holdings Pty Limited has been appointed in my stead." The appellant's oral evidence as to whether this letter was accurate was unclear. He explained that at the time he wrote the letter he was suffering from "a serious mental depression". One may sympathise with the appellant's condition, but that does not afford a basis to upset the learned primary judge's finding of fact, based on his assessment of the appellant's credibility, that the appellant failed to make good his claim that he is the trustee of the WGK Trust. It is well-established that issues of credibility should, in all but the most extraordinary circumstances, be left as a matter for the judge with the opportunity of seeing and hearing the relevant witness give evidence.[5] There is no reason to suspect that the learned primary judge misused his advantage of observing the appellant give evidence in making the finding that he did.
[13]
[11] On appeal the appellant sought to adduce evidence of a deed of appointment dated 12 July 2005 appointing him trustee of the WGK Trust. That deed cannot establish that the appellant was the trustee of the WGK Trust at the time of the hearing before the learned trial judge and so the appellant could not seek to demonstrate error on the part of the learned trial judge by relying upon it. Nevertheless, Mr Cregan of Counsel, who appeared for the appellant, also relied upon the new deed to establish the appellant's standing to seek declaratory relief from this Court. Given the disposition of the other issues in this appeal it is unnecessary to determine whether or not the deed is effective for that subsidiary purpose.
[14]
[12] On the appeal the principal basis of relief urged by the appellant was that the learned primary judge erred in refusing to declare that the appellant was not personally indebted to the company in respect of the moneys lent originally to Joymar as trustee of the WGK Trust. This was not a contention which was litigated below. It is quite apparent that the issue tendered to the learned trial judge for decision was whether he was indebted to the company in his capacity as trustee of the WGK Trust. It was expressly in that capacity that the appellant made his application to the court below. There is no suggestion in the evidence that the liquidators or the respondents had ever asserted that the debt to the company was owed by him personally, and such a suggestion was disavowed by Mr Sweeney of Counsel on behalf of the respondents.
[15]
[13] Notwithstanding the valiant efforts of Mr Cregan, who said all that could be said on his client's behalf, and said it very well, I am not persuaded that there was ever a dispute between the parties relating to the appellant's personal indebtedness to the company, or that his Honour was asked to decide such an issue at first instance. The appellant's contentions in this regard were simply not available to him on appeal.
[16]
[14] The learned trial judge's refusal to find that the loans recorded in the company's books were shams was plainly correct. The appellant has not been able to establish that the entries were not made with the intention to reflect the true relationship between the parties in the entries in the company's books of account. At the time of the loans, Mr Kendell Snr was the individual with control over both the lender, the company, and the borrower, Joymar as trustee of the WGK Trust. The appellant can point to no evidentiary basis for his contention that Mr Kendell Snr did not intend the entries correctly to reflect the true relationship between the company and Joymar as trustee of the WGK Trust.
[17]
[15] The appellant bore the onus of showing that the loans reflected by the entries were a sham.[6] Not only did the appellant fail to identify any motive which might explain why Mr Kendell Snr did not truly intend the transactions which he recorded to have legal effect,[7] there was evidence which tended strongly to confirm that Mr Kendell Snr intended to document a genuine transaction. The tax return for the WGK Trust for the year ended 30 June 1988 shows a loan of $298,433 as a current liability of the trust. Further, Mr Kendell's will, made in 1993, referred to all loans by the company to related parties as if they were genuine loans.
[18]
[16] Importantly in this regard, in 1997, the appellant executed a settlement deed which acknowledged the indebtedness of the WGK Trust to the company. The respondents now contend that the appellant is estopped by the deed from asserting that the trustee of the WGK Trust was never indebted to the company. However that argument be resolved, the acknowledgment of the debt in the deed is a powerful piece of evidence that the trustee of the WGK Trust had no basis then and,
[19]
a fortiori, no basis now, for disputing the genuineness of the loan by the company to the WGK Trust.
[20]
[17] Because I am of the view that the learned primary judge's conclusion on this issue was plainly correct, it is unnecessary to consider further the respondents' argument that the appellant is estopped by the terms of the 1997 settlement deed from denying the indebtedness of the WGK Trust to the company.
[21]
[18] I now turn to consider the appellant's claim for a declaration that his sisters remain indebted to the company notwithstanding the terms of the 1997 settlement deed. Once again, his Honour held that the appellant's claim is without legal merit.
[22]
[19] The appellant disputed the correctness of his Honour's conclusion in this regard, but did not seek any relief relating to this issue on appeal. It seems that the parties have agreed between themselves that the debts should be regarded as irrecoverable; but however that may be, no relief in relation to this aspect of the matter was sought from this Court.
[23]
[20] For these reasons, in my respectful opinion, the appeal should be dismissed.
[24]
[21] Mr Sweeney sought an order that the appellant pay his clients' costs of the appeal on the indemnity basis. This Court has the power to make any order it considers appropriate concerning the costs of an appeal.[8] Despite the existence of this wide power, the Court will usually only award costs on the standard basis unless it is of the view that the conduct of the appeal by a party has been "plainly unreasonable" or there are other "special or unusual features" justifying a departure from the usual course.[9]
[25]
[22] In my respectful opinion, an order of costs on the indemnity basis is appropriate in this case. The principal contention advanced by the appellant before this Court, and which was the focus of attention at the hearing of the appeal, related to an issue which had not been litigated below and which was not available to be raised for the first time on appeal. The assurance of freedom from personal liability that the appellant claimed to seek by way of an order from this Court had never been sought in clear terms by him and, most importantly, was not sought by him between the decision at first instance and the hearing of the appeal. The appellant's conduct was, in my view, so unreasonable as to require him to be ordered to pay costs on the indemnity basis.
[26]
[23] The appeal should be dismissed and the appellant should be ordered to pay the respondents' costs of the appeal on the indemnity basis.
[27]
[24] The appellant's application for leave to amend his notice of appeal to raise an appeal against the costs order below and the application of the respondents in relation to costs should be struck out with no order as to costs in either case.
[28]
[25] DOUGLAS J: I have had the advantage of reading the reasons for judgment of Keane JA. I agree with them and with the orders proposed by his Honour.
[29]
[1]Inre Kendells (NSW) P/L (in liq); Kendell v Sweeney & Ors[2005] QSC 64; SC No 8347 of 2002, 17 March 2005.