Kira Holdings Pty Ltd v Daquino

LEGISLATION CITED : (CTH) Family Law Act 1975, s 87 (NSW) Real Property Act 1900, s 74O

Brown v Heffer (1967) 116 CLR 344 Centennial Coal Company Ltd v Xstrata Coal Pty Ltd [2009] NSWSC 788 Hume v Monro (No 2) (1943) 67 CLR 461 CASES CITED : In Re Marquess of Abergavenny's Estate Act Trusts Marquess of Abergavenny v Ram & Anor [1981] 1 WLR 843 Kira Holdings Pty Ltd v Daquino [2010] NSWSC 201 McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 Refina Pty Ltd v Binnie (Costs) (2009) NSWSC 1098 Swan Resources Ltd v Southern Pacific Hotel Corporation Energy Pty Ltd [1983] WAR 39

Kira Holdings Pty Ltd (first plaintiff) PARTIES : Chipping Norton Sand & Soil Supply Pty Ltd (second plaintiff) Marianina Daquino (defendant)

COUNSEL : JT Gleeson SC w T L Wong (plaintiffs) G C Lindsay SC w C P Locke (defendant)

SOLICITORS : Thomson Playford Cutlers (plaintiffs) Argyle Lawyers (defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

2009/290621 Kira Holdings Pty Limited & Anor v Marianina Daquino JUDGMENT 1 HIS HONOUR: On 25 August 1978, the defendant Mrs Marianina ("Nita") Daquino and her former husband the late Mr Guiseppe ("Joe") Daquino and related family companies, including the plaintiffs Kira Holdings Pty Limited and Chipping Norton Sand & Soil Supply Pty Limited, entered into a Deed of Maintenance Agreement, which was that day approved by the Family Court of Australia pursuant to (CTH) Family Law Act 1975, s 87. The Maintenance Agreement established a trust for the benefit of Nita and Joe of certain land held by Kira at Hoxton Park. On or about 20 November 1992:

· Nita, Joe and their children Ann Angela Daquino, Marian Bodsworth and Len Leonardo Daquino ("the children"), and Kira entered into a Deed of Family Arrangement, by which Nita and Joe authorised Kira to enter into a joint venture with Chipping Norton for the development of the Hoxton Park land on terms that, in return for Kira making available the land to Chipping Norton for development and sale, Chipping Norton would pay Kira $3,740,670 and would be entitled to the net balance proceeds of sale of the land after development. The Deed of Family Arrangement contained a schedule prescribing how Kira was to distribute the moneys to be received by it from the joint venture - between Nita and Joe and, at their irrevocable direction, to the children; · Kira and Chipping Norton executed a document, styled "Deed of Agreement", providing for the joint venture contemplated by the Deed of Family Agreement ("Joint Venture Agreement"); and

· Joe, Nita, the children and Kira executed a deed by which each indemnified Joe, Nita and Kira in respect of any tax that might be levied arising out of the joint venture ("Deed of Indemnity"). 2 Thereafter, Chipping Norton proceeded to develop the land. By 31 March 1995, Nita had been paid the sum of $1,013,890 in accordance with her entitlements under the Deed of Family Arrangement (the timing of the payments having been varied by agreement between the relevant parties), and payments had also been made to the children and Joe in the amounts stated in the schedule. Chipping Norton has since continued to develop the Hoxton Park land, not all of which has yet been sold. In 2009, Nita lodged caveats claiming a beneficial interest in the land not yet sold, which remained in Kira's name. 3 The plaintiffs contend that:

· by entering into the Deed of Family Arrangement, Nita and Joe reached agreement as to the manner in which their interests in the trust property would be valued and distributed, with the result that the Hoxton Park land ceased to be trust property; · upon distribution of the proceeds received by Kira, in accordance with the schedule to the Deed of Family Arrangement, the trust was extinguished; and · accordingly, that Nita has no on-going interest, beneficial or otherwise, in the Hoxton Park land, or its proceeds. 4 Nita took a preliminary objection to the determination of the proceedings pending the final hearing of certain other proceedings in this Division pertaining to the Daquino Family Trust. I was unpersuaded that the pendency of the other proceedings provided any reason why these proceedings, which had been set down for final hearing as an expedited matter without objection, should be deferred. I also rejected a belated application for leave to file a cross-claim to impugn the November 1992 transaction [Kira Holdings Pty Ltd v Daquino [2010] NSWSC 201]. Nita's substantive case was the trust created by the Maintenance Agreement had not been extinguished, because:

· there was insufficient evidence that the payments contemplated by the schedule to the Deed of Family Arrangement were in fact made, or were made pursuant to that deed; · the effect of the November 1992 documentation was that the Hoxton Park land was to be developed by a joint venture between Kira (as trustee for Nita and Joe) and Chipping Norton, at the conclusion of which there was to be an accounting of moneys referrable to the joint venture. The trust could not be said to have been extinguished by performance until the lands have been fully developed and sold, and there has been a full accounting; and · even if the November 1992 documentation had been duly executed and implemented, clause 11 of the Joint Venture Agreement provided that Chipping Norton was to have no interest in the land; moreover, there was no release of Nita from her liability as a beneficiary to indemnify Kira as trustee. The Clause 8 Trust 5 Joe and Nita divorced on 24 May 1978, and settled the financial issues between them by the Deed of Maintenance Agreement of 25 August 1978, which made provision for division of their property. It dealt not only with their personal property, but also with the property of various family companies, including Kira. Clause 8 of the Maintenance Agreement, which established the trust of the Hoxton Park land, relevantly provided as follows: 8. Kira agrees to sell to the husband and the wife the real estate owned by it at 7A and 7B Yarana Road, Hoxton Park, being the whole of the land comprised in the Certificates of Title Volume 6089 Folio 209 and Volume 7285 Folio 69 and 70 upon the following terms: (a) The sale price will be $75,000.00 to be paid in the manner hereinafter appearing. (b) Kira will remain the legal registered owner of the property on trust for the husband and the wife on the terms hereinafter appearing. (c) Kira may from time to time raise on security of the said property an advance for its own use and benefit to the extent of the sum not in excess of $75,000.00 provided however that Kira hereby indemnifies and saves harmless the parties from and against all costs, charges, actions, suits, demands or the like arising out of or in connection with the raising of the said sum or its repayment or the payment of any interest thereon … (d) Subject to subclause (f), Kira will carry out on behalf of itself to the extent of the $75,000.00 owing to it and thereafter on behalf of the husband and the wife the development or subdivision of the property. (e) Kira will pay and when the same shall become due and payable all municipal and water rates and land tax and any other tax or charge payable in respect of the said property and will be entitled to the possession, use and enjoyment of the property until the property is sold or until an agreed development or subdivision is commenced. (f) Kira shall be entitled to receive all the rents and profits arising from the use of the property until the same has been sold or some agreed development or subdivision is commenced. (g) Kira will not incur development or subdivision costs and expenses without the joint consent of the husband and the wife's attorney. (h) Kira will not sell the said property or any part thereof save for the approval of the husband and the wife's attorney but will sell the said property or any part thereof at the joint request of the husband and the wife's attorney … (i) Upon such sale of the whole or any part of the property Kira shall apply the proceeds of sale in the manner following, that is to say: (i) in payment of agents' selling commission, if any; (ii) in payment of any legal costs and disbursements of and incidental to such sale; (iii) in payment or reimbursement of any development or subdivision costs and expenses which have been incurred pursuant to subclauses (c) and (f) hereof; … (iv) in payment of the sum of $75,000.00 or part thereof (as the case maybe) to Kira in satisfaction or part satisfaction of the purchase price above provided for; (v) in payment of one-third of the remainder to the husband and one-third to the wife; (vi) in payment of the residual one-third of the remainder to be divided between the children in equal shares in reduction of any amounts owing by any of the companies to the children; provided however, that if at the date of such sale there are no such moneys owing to the children … in payment of that sum (or the excess between the said one-third share and the sum owing) to the husband and wife in equal shares. 6 Although, as set out above, clause 8 referred to "7A and 7B Yarana Road, Hoxton Park, being the whole of the land comprised in Certificate of Title Volume 6089 Folio 209 and Volume 7285 Folio 69 and 70", reference to the Sixth Schedule to the Maintenance Agreement clarifies that the parcel comprised "Lots 7A and 7B in DP 21656 being the whole of the land comprised in the Certificates of Title Volume 6089 Folio 209 and Lot 7 in DP 21656 being the whole of the land comprised in Certificates of Title Volume 7285 Folio 69 and 70". It seems that there was an error in the engrossment of clause 8 in this respect, and it appears to be accepted that the trust extended to Lots 7, 7A and 7B, and I proceed on that basis. 7 Thus the terms of the trust contemplated that:

· Joe and Nita would be the only persons with any beneficial interest in the Hoxton Park land; · Kira would undertake the development or subdivision of the Hoxton Park lands, on its own behalf to the extent of $75,000 to be raised and applied by it to development costs, and thereafter on behalf of Joe and Nita; · Kira would sell the Hoxton Park land upon the joint request of Joe and Nita; and · upon any such sale, Kira would apply the proceeds towards payment of expenses, and then pay the remainder to the beneficiaries (Joe and Nita) in equal shares - while that was subject to an obligation to make payments to the children in reduction of any amounts owed to them by the companies that were party to the deed, no such amounts were in fact owing.

The November 1992 Transactions 8 It was admitted that Nita had signed the Deed of Family Arrangement and the Deed of Indemnity, but not that she had done so in the presence of Mr Stoikovich in about November 1992, nor that she had placed her initials on those documents at about the same time. In the absence of contrary evidence, the inference to be drawn from the document itself is that it was executed and witnessed as it purports to have been, and initialled at the same time. Mr Stoikovich did not (unsurprisingly) have an actual recollection of the precise events, but gave evidence of his practice, that he signed as a witness only where documents were executed in his presence. There was no evidence to the contrary. I am satisfied that Nita signed the Deed of Family Agreement and Deed of Indemnity in or about November 1992 in the presence of Mr Stoikovich, and initialled the Joint Venture Agreement in his presence at the same time. 9 On 13 November 1992, Stoikovich & Banfield (acting for Nita and at least some of the children) forwarded the Deed of Indemnity and Deed of Family Arrangement, executed by Nita and the children, to Waters & Mullins (acting for Joe), with instructions to exchange and return the counterpart. On 20 November 1992 Waters & Mullins, by letter to Stoikovich & Banfield enclosed the original Joint Venture Agreement, Deed of Family Arrangement and Deed of Indemnity executed by Joe, and confirmed that the payments referred to in the Deed of Family Arrangement had been made "on Friday last, 13th instant". This was a reference to the payment to each of the children of $377,630, payable on the signing of the agreement. Those letters satisfy me that the counterparts were exchanged so as to make a binding agreement. There was no evidence to the contrary, and no contrary proposition was put to Mr Stoikovich. 10 The Deed of Family Arrangement recited that: It has now been agreed between Kira and [Chipping Norton] for … [Chipping Norton] to proceed with the development, subdivision into residential lots and sale of the same as a joint venture with Kira and guaranteeing to Kira the payment of the value of the property in the sum of $3,740,670.00. 11 The Deed of Family Arrangement relevantly provided as follows: 1. Kira will enter into the joint venture agreement on behalf of [Joe] and [Nita] a copy of which has been signed by all the parties hereto for identification. 2. Out of the proceeds to be received by Kira from the sale of the property in accordance with the said joint venture agreement [Joe] and [Nita] will pursuant to the natural love and affection owed by them to their children make by way of gift to the children the amounts referred to in the schedule hereto and at the times therein provided. … 4. To enable the completion of the arrangements as contained herein [Joe] and [Nita] do hereby irrevocably authorise and direct Kira to pay to the children by way of gift the amount referred to in the schedule hereto out of the proceeds of the said sale. 12 The schedule provided for the following payments:

· To Joe, $1,113,890, on 30 June 1996; · To Marianina, $1,013, 890 on 30 June 1994; and · To each of the children, a total of $537,630: $377,630 upon execution, $38,000 on 30 June 1994, a further $22,000 on 30 June 1994, and the final $100,000 on 30 June 1995. 13 The Joint Venture Arrangement obliged Kira to make the Hoxton Park land available to Chipping Norton for the purpose of development, subdivision and sale, and for Chipping Norton at its own expense to perform those functions (clauses 1 and 2). Clause 3 relevantly provided: The proceeds of the sale of the residential lots or any part thereof shall be applied in the following order of priority: (a) To repay all moneys that may have been borrowed at any time on the security of the property or for which [Kira] is or may be in any way responsible together with all interest payable in respect thereto and all expenses and other liabilities that may have incurred in respect thereto. (b) To pay to [Kira] the sum of $3,740,670.00 in accordance with the schedule hereto and all other moneys that may be owing to it. And subject thereto: (c) To pay any outstanding rates and land tax that may have not been satisfied and any other debts or liabilities incurred by the joint venture or owing in respect of the property or in respect of the development thereof. (d) To repay to [Chipping Norton] all amounts outlaid by it for the development and subdivision of the property. (e) The balance, if any, will be paid to [Chipping Norton] for its sole use and benefit absolutely. 14 Clause 11 provided as follows: Nothing in this agreement whether express or implied shall create any estate or right or caveatable interest in the property on behalf of [Chipping Norton] and [Chipping Norton] shall not be entitled to lodge or maintain any caveat affecting the property or any part thereof and no such estate, right or caveatable interest shall be obtained by [Chipping Norton] pursuant to or by virtue of this agreement. 15 The Schedule provided for payments to Kira on the dates and in amounts equivalent to those which, under the Deed of Family Arrangement, Kira was obliged to make to Joe, Nita and the children. 16 Chipping Norton proceeded to develop the land. Nita, the children and Joe received the amounts referred to in the schedule, albeit not strictly in accordance with the originally prescribed timeframe. It was admitted that each of the children had received payments corresponding to the amounts in the schedule to the Deed of Family Arrangement. No such admission was made in respect of Nita (it being admitted only that she had received approximately $1 million), but there is evidence from which the inference that such payments were made may comfortably be drawn. The letter of 20 November 1992 from Waters & Mullins to Stoikovich & Banfield, confirming that the payments referred to in the Deed of Family Arrangement had been made "on Friday last, 13th instant", evidences the payment to each of the children of the $377,630 payable on the signing of the agreement. Chipping Norton's financial statements for the year ended 30 June 1994 record a loan from Nita of $1,013,890 (being the precise amount due to her under the Deed of Family Arrangement), less a cash payment of $200,000. While strictly this ought to have been recorded as a loan to Kira (for the benefit of Nita), it nonetheless evidences a part-payment to her of $200,000. It also evidences the outstanding amounts of $160,000 due to each of the three children. On 12 October 1994 Stoikovich & Banfield wrote to Mr Greg Peel, accountant, conveying their instructions that in principle their clients (Nita and Ann) were willing to accept a proposed variation, by which in addition to the $200,000 already paid a further $450,000 was to be paid to Nita, leaving a balance of $363,890 to be paid by 31 March 1995. (Mr Stoikovich's evidence - that he would take instructions before sending a letter such as that of 12 October 1994 - reinforces the inference that the $200,000 had been paid and that Nita was accepting that if she received the two further payments of $450,000 and $363,890 that would satisfy the amount due to her under the Deed of Family Arrangement). Minutes of a meeting of Chipping Norton and Kira held on 27 March 1995 record a resolution passing for payment a cheque for $363,890 to Nita, and cheques for $60,000 to each of the three children. Those cheques, and bank statements evidencing their presentation and payment, are also in evidence. Chipping Norton's financial statements as at 30 June 1995 show that Nita's loan account, which opened at $813,890, had been paid in full during that financial year, and the children's loan accounts, previously of $160,00 each, had also been discharged. Joe's loan account was reduced from $1,659,381 to $409,116 (a reduction approximate to, but in excess of, the $1,113,890 due to him under the Deed of Family Arrangement); the $409,116 remained a debt due to his estate reflected in the probate of his estate, and there is no suggestion of any complaint by or on behalf of Joe or his estate that he had not been paid. 17 In my view, that material plainly justifies an inference that the sums referred to in the Deed of Family Arrangement were paid. It was submitted that it was not established that they were paid under and pursuant to the Deed of Family Arrangement; but, if they were received by Nita and the children pursuant to some other arrangement or circumstance it would be a quite extraordinary coincidence, and one that should have been capable of easy proof by Nita or the children giving evidence to that effect, yet they did not do so. In the absence of evidence from them, I all the more comfortably draw the inference that I would in any event have drawn from the co-incidence of the amounts, that the payments referred to in the Deed of Family Arrangement were made. 18 It was also submitted that those payments could not have been in accordance with the Deed of Family Arrangement, which was said to require them to be only from the proceeds of sale - inter alia because at least some payments were made before there were any sales. In my view, the reference in clause 2 of the Deed of Family Arrangement to the concept "out of the proceeds to be received by Kira from the sale of the property in accordance with the said Joint Venture Agreement" was not intended to prescribe that the immediate source of funds must be the proceeds of a sale. Both the Deed of Family Arrangement and the Joint Venture Agreement required an initial payment (of $1,132,890) to be made upon the signing of the agreement, which could not conceivably have been "out of the proceeds to be received by Kira from the sale of the property" - because no sale could by then have taken place. The purpose of that phrase was to indicate how the proceeds were ultimately to be applied and apportioned, not to prescribe that the payments must immediately be sourced in them. The deeds bound Chipping Norton and Kira respectively to make certain payments on particular dates; that such payments might not have been sourced immediately in the proceeds of sale does not prevent them from operating as a discharge of the obligation to make the payment. 19 By 2009, not all the Hoxton Park land had been developed and sold, and some remained registered in the name of Kira. Partly as a result of the subdivision and development effected by Chipping Norton, the value of the land had increased. On 25 September 2009, Nita lodged a caveat ("first caveat") over the land still then held by Kira as registered proprietor. On 1 December 2009, the parties reached agreement on an interim regime, pending final determination of the current proceedings, whereby Nita would withdraw the first caveat and, upon registration of the new deposited plan, lodge a further caveat ("second caveat") over Lot 333 of DP 1144124 only (being residual as yet undeveloped land); and that Kira and Chipping Norton would deposit the proceeds of any sale of the land previously subject to the first caveat in an interest bearing account and not dispose of them other than in ordinary course of business. As a result, Nita has withdrawn her first caveat and lodged a second caveat, over Lot 333, claiming an "equitable interest as beneficial one-half owner in land held by Kira as trustee of [Nita]"; and all proceeds received from the realisation of the Hoxton Park land after 1 December 2009 have been deposited in a bank account held by Chipping Norton with the Commonwealth Bank of Australia. The Effect of the 1992 Transactions 20 As has been recorded, under clause 8 of the Maintenance Agreement, Kira was obliged to develop or subdivide the Hoxton Park land, and/or sell it, and to distribute the net proceeds equally between Joe and Nita (subject to paying any debt due to the children up to one-third of those proceeds, but there was no such debt). Thus, Joe and Nita were the sole beneficiaries of the clause 8 trust. In my view, for the reasons that follow, the effect of the November 1992 transactions was that Kira's sole beneficiaries Joe and Nita authorised and directed it to enter into the joint venture with Chipping Norton, on the basis that Kira would accept in return for its interest in the land a sum considered to represent its market value, namely $3.74 million, which would thereafter constitute the trust fund, and which Kira would distribute in accordance with their directions between themselves and their children. 21 It is apparent from correspondence that culminated in the Deed of Family Arrangement that Joe proposed, as a means of implementing the intent of the Maintenance Agreement, that the whole of the Hoxton Park land (33.250471 acres) be transferred to Chipping Norton (which he controlled) for a consideration calculated at the rate of $112,500 per acre and amounting to $3,740,670, which "represents a fair market price considering all the circumstances that have existed in respect to the land", allowing "all the owners to now receive entitlements in respect to the 'jointly' owned property" [letter from Greg Peel to Stoikovich & Banfield, 21 July 1992, confirming discussions held on 17 July 1992 "in respect to the offer that is now made by [Joe] on behalf of himself and [Nita] for the benefit of [the Children]"]. Presumably with an eye to avoiding stamp duty, the arrangement was ultimately structured, under the Joint Venture Agreement, as one whereby, rather than an outright sale to Chipping Norton:

· Kira agreed to make the lands available to Chipping Norton for development by Chipping Norton; · Chipping Norton undertook to effect the development, subdivision and sale of the lands at its own expense; · Chipping Norton would pay Kira the agreed price of $3,740,670. This represented $112,500 per acre, and was regarded as representing a fair market price at the time; · Chipping Norton would be entitled to the balance proceeds of development, subdivision and sale for its sole use and benefit absolutely; but

· Meanwhile, the property would remain in the sole and unencumbered ownership of Kira until completion of the sale of each individual subdivided allotment, but Kira would do all things necessary or convenient for the purpose of the sale and completion thereof of the individual subdivided allotments. Thus, clause 9 of the Joint Venture Agreement was as follows: Subject to the provisions of clause 10 hereof the property shall remain in the sole and unencumbered ownership of the owner until the completion of the sale of each individual subdivided allotment but the owner shall, as and when required do all things and execute all such documents as may be necessary or convenient for the purpose of the sale and completion thereof of the individual subdivided allotments. 22 The Deed of Family Arrangement recited that Kira held the Hoxton Park lands in trust for Joe and Nita in equal shares, that Joe and Nita had always intended and desired to provide further for their children upon sale of the property to the extent of in excess of one-third of the proceeds, and that Kira and Chipping Norton had agreed that Chipping Norton would proceed with the development, subdivision and sale of the lands as a joint venture with Kira guaranteeing to Kira payment to the value of the property in the sum of $3,740,670. Kira's beneficiaries Joe and Nita consented to that course, as clause 1 of the Deed of Family Arrangement expressly recorded. In addition, the Deed of Indemnity recited that Kira held the land as trustee for Joe and Nita, who held all the beneficial interest in it, and had agreed to provide it to a joint venture to enable it to be subdivided and sold by Chipping Norton subject to payment to Kira of an agreed amount. 23 The effect of the Joint Venture Agreement was that the trust property became Kira's rights under that agreement, rather than the real property per se, and the beneficiaries' rights against Kira were to have Kira enforce the Joint Venture Agreement, and in particular recover the $3.74 million. Those rights of Kira included its ongoing entitlement to the Hoxton Park lands until sale of each subdivided lot, and the right to receive $3.74 million from the proceeds; but upon payment in full of the $3.74 million, Kira had no further entitlement in respect of the proceeds of sale of the land. Although Kira retained title until the ultimate sale of each subdivided lot, and (because of clause 9 and clause 11) Chipping Norton did not acquire a beneficial interest in the land, Kira's interest was subject to its contractual obligations to Chipping Norton. This is not an unfamiliar concept: although upon exchange of contracts a purchaser ordinarily acquires a beneficial interest in the property, where statute imposes a requirement for Ministerial or similar consent before there is any effective disposition, the purchaser obtains no equitable interest before consent is given, but has a right enforceable in equity to have the vendor do all things reasonable to obtain the consent, which once given "has a kind of retroactive effect making the instrument effective from its date": McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656, 661; Brown v Heffer (1967) 116 CLR 344, 352; Swan Resources Ltd v Southern Pacific Hotel Corporation Energy Pty Ltd [1983] WAR 39, 42. 24 Until Kira had received the whole $3.74 million, Joe and Nita retained some beneficial interest in the Hoxton Park lands, from which that sum was to be paid, and which would presumably revert to the trust if the joint venture failed or was terminated. But once that sum was paid to Kira in full, it (and not the remaining Hoxton Park land) constituted the trust property. Thereafter, the beneficiaries had no on-going interest in the Hoxton Park lands. 25 For Nita, Mr Lindsay SC rightly identified as the critical issue how the beneficial interest Joe and Nita in the Hoxton Park land could be said to be extinguished, having regard in particular to clause 11 of the Joint Venture Agreement. It is clear enough that upon completion of the sale of each lot, Kira was obliged to release the title and Chipping Norton became exclusively entitled to the proceeds (subject to prior payment of the $3.74 million). Clause 11 shows that it was not intended that the beneficial interest pass until then. Thus the intention of Kira (and of Joe and Nita who consented) and Chipping Norton was that the beneficial interest not pass until ultimate excision and sale of each subdivided lot. This means that Chipping Norton's rights under the joint venture were, until that point, contractual rather than proprietary in nature. Conversely, Kira's proprietary interest was subject to its contractual obligations to Chipping Norton under the Joint Venture Agreement. But once Kira had received the $3.74 million, that fund constituted the trust property, and Joe and Nita had no on-going interest in the lands. And even before then, after execution of the Joint Venture Agreement they were not absolute beneficial owners, their rights in equity being to have Kira enforce the Joint Venture Agreement. Once Kira had received all it was entitled to under the Joint Venture Agreement, they had no further beneficial interest in the land. To the extent that it is necessary to say where the beneficial interest lay, then after Kira had received the $3.74 million it resided with Kira alone, but subject to Kira's contractual obligations to Chipping Norton. (If this analysis be incorrect, then clause 11 must be regarded as legal nonsense. After payment of the $3.74 million, the only party entitled to any benefit from the Hoxton Park lands is Chipping Norton, which has rights enforceable in equity in the nature of specific performance). 26 By the Deed of Family Arrangement, each of Joe and Nita not only authorised their trustee Kira to enter into the Joint Venture Agreement but further agreed that from the proceeds to be received by Kira from the joint venture, they would make gifts to the children in the amounts specified in the schedule, and distribute the balance to Joe and Nita. (Significantly, whereas the payments to be made to the children were described as "gifts", those to be made to Nita and Joe were not - consistently with the fact that, as the sole beneficiaries, they were entitled to the proceeds of the trust property, so that no notion of gift was involved). In combination with the Joint Venture Agreement, the effect was that the beneficiaries' rights against Kira became to have Kira enforce the Joint Venture Agreement, and in particular recover the $3.74 million, and as and when Kira received that sum, to distribute that amount to (or as directed by) the beneficiaries in accordance with the Deed of Family Arrangement. Upon distribution of the $3.74 million in accordance with the directions of the beneficiaries, the trust property would be exhausted, and Kira had no further obligations to them. 27 For Nita, Mr Lindsay SC argued that there was no express release of liability for Nita - or for that matter Joe - as a beneficiary, to indemnify Kira as trustee. However, their beneficial interests were progressively diminished by payment of instalments on account of the $3.74 million, until the position was reached upon the final payment that there were no remaining assets held on trust for them, and thus no right of indemnity against them. Once the $3.74 million was distributed in accordance with their directions, there was no more trust property and the trust was extinguished. 28 In Re Marquess of Abergavenny's Estate Act Trusts Marquess of Abergavenny v Ram & Anor [1981] 1 WLR 843, trustees were directed to hold a settled fund on trust for the plaintiff as tenant for life, with remainders over in strict settlement and an ultimate remainder to the plaintiff. The trustees were given a wide continuing discretionary power to raise and pay to the plaintiff or any other life tenant from time to time during his life and on his written request "any part or parts not exceeding in all one-half in value of the settled fund of which he becomes tenant for life in possession", and for that purpose could "compute and decide the value of the settled fund or any part thereof" as they thought proper. In 1965, the trustees exercised their power to its full extent in favour of the plaintiff. Subsequently, the monetary value of the retained half share of the fund considerably appreciated, partly because the trustees had bought from the plaintiff the family estate, which had increased in value. The plaintiff argued that in those circumstances, on an upward revaluation of the settled fund, the trustees were entitled to make further payments to him; but Goulding J held that the only true conclusion was that the half share of the assets already paid out to him under the terms of the power given to the trustees represented the full extent of what the settlor had authorised, and no further exercise of their power in favour of the plaintiff on an appreciation of assets was possible. His Lordship said (at 847): I think myself that the reason why there is no direct authority on the question is because the answer has always seemed plain. Any layman, and any lawyer I think, without such special and persuasive advocacy as I have heard this morning, would feel that where there is a power to make successive payments to a person up to a limit of a certain fraction of a fund and at a certain date, he, the beneficiary, has received assets then fully reaching the prescribed limit, thereafter no further exercise of the power is possible. All that the settlor authorised has been done. It would be to my mind strange and unexpected if the object of the power as such retained an interest or possibility of interest in the fund still in settlement, so that he could require accounts from the trustees and demand reconsideration of his position whenever there should be an appreciation of assets.

29 Similarly, having authorised Kira to enter into the Joint Venture Agreement, and having agreed to the distribution of the proceeds amongst the beneficiaries, Nita, having received her full entitlement, cannot now complain that, had Kira retained the lands and not entered into the Joint Venture Agreement or distributed the proceeds, her interest would be significantly greater in value. 30 Even if that analysis were incorrect, and Kira until the final day of completion of the last sale of the last subdivided lot continues to hold on trust for Nita and Joe its interest in seeing the joint venture to completion, the only relief a court of equity would give the beneficiaries would be an order that Kira enforce the Joint Venture Agreement. That would not entitle Joe or Nita to prevent a sale, nor to claim any interest in the proceeds of a sale, and even if it could be characterised as a sufficient interest in theory to support a caveat, there would be no practical utility in maintaining it, such that the balance of convenience would plainly favour its removal. Relief 31 The relief claimed by Kira and Chipping Norton in their amended summons was - other than removal of the remaining caveat - in the nature of negative declarations, to the effect that Nita has no interest in, claim to or rights in respect of the remaining lands or the proceeds of those lots that have so far been sold. For good reason, the court is normally reluctant to make negative declarations [Hume v Monro (No 2) (1943) 67 CLR 461, 474 (Latham CJ), 478-9 (Starke J); see also Centennial Coal Company Ltd v Xstrata Coal Pty Ltd [2009] NSWSC 788, [53]-[55]]. 32 In respect of the accumulated proceeds of sale, it is preferable to make a positive declaration that Chipping Norton is entitled to them to the exclusion of Nita. In respect of the remaining land - lot 333 - the plaintiffs are entitled to an order for removal of the caveat. Mr Gleeson SC submitted that a declaration that Nita had no interest would be of utility, because it would stop another caveat being lodged, but a further caveat could in any event not be lodged without leave [(NSW) Real Property Act 1900, s 74O]. A suitable affirmative declaration, to the effect that Nita's beneficial interest under the clause 8 trust has been extinguished, can in any event be formulated. Conclusion 33 The joint venture with Chipping Norton was a means for Kira to implement and discharge the trust created by the Maintenance Agreement, by providing to Chipping Norton the Hoxton Park land, in return for what was considered its then (undeveloped) market value, and also for Chipping Norton to implement the development at its own cost. Kira (for the benefit of Joe and Nita) was to receive the agreed value of the Hoxton Park land, with Chipping Norton being entitled to the balance of the proceeds of sale after the payment to Kira. By the Deed of Family Arrangement, Kira and the beneficiaries agreed that the trust fund, which would as a result be constituted by the sum received from Chipping Norton, should be distributed to the beneficiaries - and their nominees, their children. Thus the Joint Venture Agreement and the Deed of Family Arrangement together involved Kira, with the consent of its two beneficiaries, accepting a monetary sum in return for the Hoxton Park land, and distributing the whole of that sum to or as directed by its beneficiaries in discharge of the trust. Thus:

· Upon entry into the November 1992 documentation, the trust property became, in substitution for the Hoxton Park land, Kira's rights under the Joint Venture Agreement; · On payment in full to Kira of the $3.74 million, Joe and Nita ceased to have any beneficial interest in the Hoxton Park lands, that interest having been converted into an interest in the fund of $3.74 million; and · Upon distribution of the $3.74 million in accordance with their instructions under the Deed of Family Arrangement, the trust was extinguished. 34 Subject to any submissions that might be made as to their form, my orders are: (1) Declare that the defendant's beneficial interest in the lands formerly comprised in Lots 7A and 7B in DP 21656 being the whole of the land comprised in the Certificates of Title Volume 6089 Folio 209 and Lot 7 in DP 21656 being the whole of the land comprised in Certificates of Title Volume 7285 Folio 69 and 70 at Hoxton Park in the City of Liverpool, pursuant to clause 8 of the Deed of Maintenance Agreement made on 25 August 1978 between Giuseppe Daquino, the defendant and others, was extinguished upon payment to her of the sum of $363,890 (being the balance of $1,013,890) on 31 March 1995.

(2) Declare that the second plaintiff Chipping Norton Sand & Soil Supply Pty Ltd (ACN 000 371 666) is entitled, for its sole use and benefit absolutely and free of any claim by the defendant, to the moneys standing to the credit of Cash Investment Account No 062 612 1018 1394 with the Commonwealth Bank of Australia.

(3) Order that the defendant within seven days withdraw caveat AF184990Y.

(4) Order that the defendant pay the plaintiffs' costs. ********** Thursday, 27 May 2010 (Costs) 35 HIS HONOUR: I gave judgment in these proceedings on 20 May 2010, when I indicated that, subject to any submissions that might be made as to their form, I would make certain orders set out in paragraph 34 of that judgment. Those proposed orders included an order that the defendant pay the plaintiffs costs. The proceedings were adjourned to today to permit counsel to consider the proposed orders. No party has made any submission in respect of the proposed form of the orders, which I will therefore make. However, the plaintiffs have made an application for indemnity costs and have also sought an order that they be released from the undertakings given to the court on 1 December 2009 by which, in return for a consensual withdrawal of the first caveat, they undertook to deposit any proceeds of sale of the Hoxton Park land in an interest bearing account. 36 Now that the issue has been resolved, and I have concluded that the defendant has no entitlement to any more of the proceeds of the Hoxton Park land, and, subject to the question of deferring it for a short time in the event of a prospective appeal, it is appropriate to release the plaintiffs from their undertaking. I will hear counsel on the question as to whether implementation of that release should be stayed at the conclusion of this judgment.

37 The principal question for determination, then, is that of costs and, in particular, whether the plaintiffs' costs should be assessed on the indemnity basis.

38 As the plaintiffs acknowledge in their written submissions, an order for indemnity costs is, as I have repeatedly said, an exceptional one: see, for example, Refina Pty Ltd v Binnie (Costs) (2009) NSWSC 1098, [4]. Although such applications have become commonplace, they are rarely successful and their prevalence is to be discouraged. 39 In this case, however, the plaintiffs point to a number of matters said to make it a sufficiently exceptional case to justify an indemnity order.

40 First, the defendant put the plaintiffs to proof of essentially every significant factual matter, although some admissions were made on the eve of the adjourned hearing. A defendant is, of course, in our adversarial system, entitled to put a plaintiff to proof, but it does so at its own risk as to costs. In this case, the facts about which the plaintiffs were put to proof were almost all within the knowledge, or means of knowledge, of the defendant, who was a personal participant in the relevant transactions at the relevant time. Had they been genuinely in dispute, she could have given evidence of a contrary version, or she could have called the children, who appear to be aligned with her interests in the proceedings, to do so. Yet no version of the facts contrary to that contended for by the plaintiffs was ever propounded, nor was any plausible alternative hypothesis advanced.

41 Secondly, the plaintiffs served notices to admit facts, which were disputed by the defendant. The matters in them were ultimately proved by the plaintiffs. The defendant's response is that the notices to admit were extensive, and sought to relieve the plaintiffs of the obligation of proving their case. That, of course, is exactly the purpose of a notice to admit: to remove facts from the need to be formally proved, where they are not reasonably in contention. I do not see that as any answer to the ordinary costs consequences of disputing a notice to admit.

42 Thirdly, while there did remain a legal issue as to the effect of the November 1992 documentation and whether it, coupled with the subsequent payments, extinguished the relevant trust upon payment, or whether the defendant retained some caveatable interest in the land, the case that the defendant had a caveatable interest - particularly after payment in full of the agreed amounts - was a weak one and, even if a caveatable interest survived it was, as I indicated in the judgment, but a bare interest representing no entitlement to any of the proceeds of sale, and no right to prevent a sale taking place, so that, on any view, it must have been apparent that the balance of convenience would favour withdrawal of the caveat.

43 The defendant advances two contrary considerations. One is that, when the proceedings were originally set down for hearing on 1 December 2009, the hearing had to be adjourned, due to the plaintiffs' inability to prove essential documents by reason of their not having been stamped. As the plaintiffs respond, the stamp duty issue was raised belatedly, on the morning of the hearing that day, without prior notice and, as it transpired, the stamp duty in question was nominal. On the other hand, the fact remains that the proceedings had to be adjourned, and the plaintiffs received the indulgence of an adjournment rather than a dismissal, by reason of the plaintiffs then being unable to prove essential matters. That is a significant consideration and, to the extent that the costs of the proceedings were increased by that adjournment, I propose to exclude them from any costs order in the plaintiffs' favour.

44 The second matter was that the plaintiffs subsequently amended the summons. However, that arose as a result of an interim arrangement reached by the parties on 1 December - pursuant to which the first caveat was withdrawn, another substituted, and an undertaking given to preserve the proceeds - so that the summons came to address the proceeds of sale rather than simply the caveat. That was a necessary step in response to matters as they evolved in the course of the proceedings, and I see no reason why the costs of the amended summons should be excluded from the costs order to be made.

45 For the foregoing reasons, I conclude that the defendant should pay the plaintiffs' costs, other than those attributable to the adjournment of proceedings on 1 December 2009, and that those costs should be assessed on the indemnity basis. 46 I therefore make the following orders

1. Orders in accordance with paragraphs 1, 2 and 3 set out in paragraph 34 of the judgment given on Thursday, 20 May 2010. 2. Order that the defendant pay the plaintiffs' costs of the proceedings, other than costs occasioned by the adjournment of the proceedings on 1 December 2010, such costs to be assessed on the indemnity basis. 3. Order that the plaintiffs be relieved of their undertaking to the court given to the court on 1 December 2009 in respect of the proceeds of sale of the Hoxton Park land. Order that the operation of this order, being the order relieving the plaintiffs from their undertakings to the court, be stayed until 10 June 2010. **********

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