Martyniuk v King [2000] VSC 319

38. Next, the applicant relies upon the fact that there has been a complete breakdown of the working relationship between the parties. In particular, it is alleged that Martyniuk has failed to co-operate with the trustee company in the conduct of the affairs of the trust. He has threatened to sue the trustee, Illawong Retirement Equity over its management of the trust and made numerous attacks on its conduct as trustee of the trust. The applicant asserts that the three unit holders are unable to agree on virtually any matter and are unable to provide clear instructions to the trustee as to the management of the affairs of the trust.

41. The last matter relied upon by Illawong Retirement Living in support of the appointment of a receiver is the fact that the sole remaining director of the trustee is in poor health and wishes to resign from office. The unit holders are unable to agree upon a replacement director of the trustee or, indeed, upon a replacement trustee. In effect, the affairs of the trust have reached an impasse. As a consequence, as a matter of last resort Illawong Retirement Living seeks the appointment of a receiver. The key issue remains in the present proceeding that the unit holders have reached an impasse. Until the substantive proceeding between them is finally determined either by way of the judgment and consequential orders to be made by McDonald J on the reserved judgment with respect to the alleged settlement agreement or, alternatively, ultimately after trial of the proceeding the affairs of the trust are in a state of disarray.

THE LEGAL PRINCIPLES: APPOINTMENT OF A RECEIVER OF THE ASSETS OF A TRUST

46. The general legal principle is that if misconduct, waste, or improper disposition of assets or that a trust is in a state of disarray can be shown, or if it appears that the trust property has been improperly managed, or is in danger of being lost or if it can be satisfactorily established that parties in a fiduciary position have been guilty of a breach of duty there is a sufficient foundation for the appointment of a receiver: Kerr on Receivers, 17th Ed. at pp.13-14. It is further observed in Kerr (at 5):

"Object of appointment. A receiver can only be properly appointed for the purpose of getting in and holding or securing funds or other property, which the court at the trial, or in the course of the action, will have the means of distributing amongst, or making over to, the persons or person entitled thereto.[1] The object sought by such appointment is therefore the safeguarding of property for the benefit of those entitled to it.[2]"

50. As observed in Halsbury Laws of England 4th ed. (Vol. 39, para 827), the general ground on which the court appoints a receiver is ultimately in every case the protection or preservation of property for the benefit of persons who have an interest in it. The basis upon which a receiver may be appointed has been regarded by the courts on even as wide a basis as when the circumstances render it just and convenient: see Manchester and Liverpool District Banking Co v Parkinson (1888) 22 QBD 173, CA.

53. The court may appoint a receiver of trust property where that is necessary for the well being of the trust: see Ford & Lee, The Principles of the Law of Trusts (2nd ed) at [1739]. In Jacobs' Law of Trust in Australia (6th ed. at [2306]) the situation with respect to trusts is conveniently summarised:

"The court also has jurisdiction to appoint a receiver of the trust property. Although the case law predominantly is concerned with private trusts, the court may, on the application of the Attorney-General, in appropriate circumstances appoint a receiver to a charitable trust.[3] If the occasion for an appointment to the assets of a private trust is refusal by one or more of the trustees to act, the court will move if there is before it the consent of those trustees who are acting as such, and of the beneficiaries; but, it seems, the court will otherwise not intervene.[4] A receiver may be appointed on the application of one of the trustees[5] or of any beneficiary[6] where the appointment is required for the safety of the trust property, the basis of the jurisdiction being the jeopardy of that property.[7] Thus, an appointment may be made if the trustees fail to get in the trust property[8] ... "

57. In Halsbury's Laws of Australia, Vol. 27 para. 430 the relevant principles are further summarised, as follows:

"The court may, on the application of a beneficiary[9] or one of the trustees[10], appoint a receiver if the security of the trust property is in jeopardy[11]. This may be so because:

(1) the affairs of the trust are in disorder and the appointment is necessary to secure continuity of management[12];

(2) the trustees cannot agree in circumstances which put the trust property in jeopardy;[13]

(3) the trustees deny or dispute the trust;[14]

(4) a trustee has died or is incapable, or for any other reason requiring the protection of trust property.

As receivership is equitable in nature, the remedy is flexible and can be moulded to the needs of the situation."

65. In Attorney General v Schonfield, Megarry VC said at 1187:

" ... the power to appoint a receiver is purely equitable in its origin; indeed it was one of the oldest remedies of the Court of Chancery. The remedy is one to be moulded to the needs of the situation: within proper limits, a receiver may be given such powers as the Court considers to be appropriate to the particular case."

69. A similar position was adopted in Attorney-General v St Cross Hospital [1856] EngR 214; (1856) 8 De GM&G 38, 41-42; see, also, Picarda The Law Relating to Receivers, Managers and Administrators (2nd ed.) at 6 footnote 4.

"The equitable remedy of receivership is available against both executors and trustees where the circumstances make it appropriate. The criteria for the appointment of a receiver to displace these fiduciaries are almost identical. Primarily it is jeopardy or the risk of jeopardy that justifies an application to the court. Assessing the degree of jeopardy or risk involves a qualitative judgment. A proper case must be made out: the court will not dispossess an executor or a trustee of the trust estate in favour of a receiver on slight grounds. The testator or other creator of the trust is presumed to have known what he was about; and normally the court respects the expressed wishes as to who should administer the trust estate. What then constitutes a proper case? The cases warrant the assertion that it should be a strong case,[15] and it must be borne in mind that receivership is a drastic and not inexpensive remedy, with the possibilities of further expensive applications to the court for directions. Misconduct is obviously a prime ground for the appointment of a receiver where the misconduct is sufficiently grave. A strong case is necessary.[16] Where one of several executors or trustees is guilty of misconduct the court will not, as a general rule, appoint a receiver on the interlocutory application of the beneficiaries without the consent of all the other trustees,[17] though it seems that the court might dispense with the consent of a trustee living abroad, or one who had practically ceased to act. On the other hand wherever all the executors or trustees are, or a sole executor or trustee is, guilty of such conduct as to endanger the property, the court will appoint a receiver.[18] Thus in Clarke v Heathfield (No 2)[19] trustees of a trade union who were thwarting court orders and putting union funds to the jeopardy of substantial depletion were removed and replaced by an interlocutory receiver. If part of a trust fund has been lost, that is prima facie evidence of a breach of duty by the trustee, sufficient to justify the interference of the court by the appointment of a receiver for the purpose of preserving the remainder of the fund on the interlocutory application of a beneficiary.[20] The fact that a sole executor or trustee is under some personal disability[21] or is of such a character as is likely to lead to the jeopardy of the trust fund is sufficient ground for the appointment of a receiver, as for example if he is of violent conduct and drunken habits.[22] If the maladministration is sufficiently serious the absence of any corrupt motive is by the by. Thus in Whitehead v Bennett[23] a sole trustee who had been guilty of improvident expenditure and wilful waste in converting farming lands into a race course was guilty of conduct justifying his replacement by a receiver."

76. Further, s.37(1) of the Supreme Court Act 1986 (Vic) empowers the court to appoint a receiver when it is "just and convenient" to do so. In National Australia Bank Limited v Bond Brewing Holdings Limited [1991] 1 VR 259 at 539 the Appeal Division of the Supreme Court of Victoria said:

"The appointment of a receiver is one of the oldest remedies of the Court of Chancery, and a very useful remedy it is. But its very efficiency means that a corresponding caution must attend its employment. Where a receiver is sought to protect property of which no one is in actual possession, no one will be ousted by the appointment and probably no great harm will be done."

"The result of the authorities is that it may not now be possible to state with confidence the limits of the power to grant injunctions. But we would say that, just as an injunction may be granted for the protection of some legal or equitable right where no lesser remedy will meet the case, so may a receiver be appointed."

23 Halsbury's Laws of England, 4th Ed. Vol. 39, paragraph [831] states:

"A receiver is also appointed on the application of any beneficiary if the appointment is required for the safety of the trust property or the due administration of the trust, but not otherwise. ... The safety of the trust property and the due administration of the trust are deemed to be imperilled where the trustee has been guilty of losing or wasting or neglecting the trust property or improperly disposing of it or of some other breach of trust, or becomes a bankrupt or insolvent, or is out of the jurisdiction or is guilty of gross misconduct. ... A receiver may also be appointed where a trustee undertakes an obligation inconsistent with his duty as such, or where co-trustees disagree among themselves or act separately."

86. In Evans v Coventry [1854] EngR 1034; (1854) 5 DE G M & G 911 the House of Lords considered an application to appoint a receiver to an insurance fund of which the plaintiff was a beneficiary. The court held that a receiver should be appointed. Lord Justice Knight Wood held that in a case of waste on the part of a trustee (in that case caused by the theft of funds by the treasurer of the insurer) an application for an injunction and receiver to the fund followed as a matter of course.

89. In Brooker v Brooker (1857) 3 SM & Giff 474 the court appointed a receiver as a matter of course to the estate of the late William Brooker on the application of the deceased's wife as executor of the estate paid money to herself contrary to the terms of the deceased's will. The Vice Chancellor, Sir John Stuart said:

" ... the Court always, under such circumstances, has been in the habit of interposing, on an application made summarily, in order to protect the property."

93. In the Earl of Talbot v Hope Scott (1858) 4 K & J 138 the court appointed a receiver to the estate of the Earl of Talbot pending the determination of the next true peer where the trustees of the estate received rents from the property of the trust when they were duty bound to hold the estate upon trust for sale. A receiver was appointed to preserve the subject matter of litigation as to who was the next true Earl of Talbot. In Sheppard v Oxenford (1855) 1 K & J 492 the court appointed a receiver to assets held in trust for the plaintiff where the trustee denied the existence of a trust and sought to exclude or deny the plaintiff's claim to an interest in the subject matter of the trust. In Oldfield v Cobbett (1835) 4 LT CH 271 the court appointed a receiver where there was a threat of waste by the named executor of an estate. Furthermore, the courts have held that a receiver will be appointed to protect a person's right to be paid out of a particular fund: Kearns v Leaf [1864] EngR 185; (1864) 1 Hem & M 681; 71 ER 299.

96. It is a well established principle that receivership is a last resort measure. In National Australia Bank Limited v Bond Brewing Holdings Limited, supra, the Appeal Division of the Supreme Court of Victoria observed (at 540):

"Of course in a strong enough case the court might, without warning to a trading company, divest it of control of its undertaking and assets. But it must always be borne in mind that the appointment of a receiver in such a case authorises an irresistible invasion and that even if the army of occupation is withdrawn after only a short time things may never be the same again. Rights of property and the company's privacy are violated. Only the most pressing need can warrant such an invasion without notice. Quite apart from the taking out of the companies' hands of control of their assets and the management of their businesses, there was in the present case the added consideration (which will not infrequently be present where a receiver is appointed to a company) that the making of the order might well have most serious legal consequences for the companies or for related companies having regard to the terms of securities given by them. An addition to the legal consequences there was the commercial consideration that, as Picarda, Receivers and Managers, p.4_,_ has observed, the receiver often seen not as the company doctor but as the undertaker, so that a blow is struck to the standing and credit of the defendants. In the present case the order sought, although interim or interlocutory, was one with extremely grave consequences for the defendants. Putting to one side a winding up order, which will in the normal course ultimately result in a company's being given its quietus, we cannot for the moment think of an order of greater consequence to a company than one which, until further order, robs it of its control over its own assets and business. No court will make such an order unless convinced of its necessity. A case for some kind and degree of interlocutory relief may be made out which falls short of this extremely drastic remedy; for example, the court may not be satisfied - and it is of course for the applicant to persuade the court that nothing less than what he seeks will do - that in all the circumstances it should do more than grant an injunction. At times the court will be induced to refuse the remedy of a receiver by. undertakings offered by the defendant."

100. The Appeal Division in Bond considered (at 541) the American position in relation to the appointment of a receiver and observed that it is a power that is "drastic, harsh and dangerous ... " and is to be exercised only " ... with utmost care and caution and only where the court is satisfied there is imminent danger of loss if it is not exercised".

103. Further in the judgment the Appeal Division considered the way in which a court should exercise the discretion (at 541-542):

"There has been a good deal more discussion of considerations bearing on the exercise of the discretion to appoint a receiver in the United States of America than elsewhere. According to 65 American Jurisprudence 2d, para. 20, the effect of the authorities is as follows: 'A court in exercising its discretion to appoint or refuse a receiver must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, the ends of justice, the rights of all the parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies. This discretion is to be exercised with great caution and circumspection, after full consideration of the facts of a particular case and the interests of all parties concerned, for a reason strongly appealing to the judge to whom the application is made.' The appointment of a receiver should be denied where it is likely to do irreparable injury to others, or where greater injury will probably result from the appointment than if none were made."

107. The Bond case was concerned with financial arrangements between a bank creditor and a commercial borrower. The present matter is one concerned with the possible appointment of a receiver to a trust. In Attorney-General v Schonfeld, supra, at first instance a receiver and manager of an educational charity was appointed empowering the receiver to "collect get in and receive all the assets property and effects" belonging to the charity and also "to manage the affairs of the said charity" until after the substantive hearing of the proceedings or further order in the meantime. Subsequently, the receiver sought orders from the court that he was entitled to carry out certain acts to facilitate the appointment of a head teacher at a school. The matter was considered by Sir Robert Mcgarry V.C. who, in the course of considering the application did not express any criticism in relation to the initial appointment of the receiver on an interim basis. The court considered very closely the authority that had been granted to the receiver and observed (at 1187):

"In holding that the receiver has this power, I bear in mind that the power to appoint a receiver is purely equitable in its origin; indeed, it was one of the oldest remedies of the Court of Chancery. The remedy is one to be moulded to the needs of the situation; within proper limits, a receiver may be given such powers as the court considers to be appropriate to the particular case."

111. The authority is cited, including the judgment at first instance in Kerr on Receivers and Administrators, 17th ed. p.6, 82 & 214.

114. The question to be determined, therefore, is whether no other avenue is available to the applicant, that is, the question is to be asked in light of the observations of the Appeal Division in Bond: is the appointment of the receiver a matter of last resort? In my view it is. For the reasons already considered with respect to the desire of the remaining director to retire combined with the difficulties in finding a non-partisan replacement of that director together with the ongoing disputes between the parties perhaps best demonstrated by the very fact that as a result of those disputes the trustee is unable to even comply with its taxation return obligations. Furthermore, there are two further factors that I take into consideration. First, Martyniuk in the amended statement of claim seeks ultimate relief, among other matters, in the nature of the appointment of a receiver of the trustee. It is ironic, therefore, that Martyniuk whilst adopting a stance that prevents the proper management of the trustee, for example, the refusal as public officer to sign the taxation returns for the company over a 15 year period demonstrates this point. Second, the nature of the business of the trustee and its three companies is the ownership and management of retirement villages. I am satisfied on the affidavit material before me, particularly the evidence of Mr Lustig contained in Exhibit PSL7 that there is a reluctance of residents to live in locations managed by the plaintiff at this point in time.

117. These two factors are compounded by the additional factor that Mr Irving, the remaining director of the trustee, wishes to retire. It is inappropriate that he finds himself compelled to continue as director and effective manager of the trust. At the same time this difficulty arises in a context where the parties are unable to agree between themselves as to a suitable replacement director. The obstinacy of the plaintiff is borne out by the fact that in the course of submissions it was urged that rather than appointing a receiver of the trustee the court should appoint a new trustee under s.48 of the Trustee Act. The plaintiff even went so far as to acknowledge acceptance of an insolvency practitioner who is a name on the list of liquidators of the Supreme Court but at the same time rejected the nominee, Mr McVeigh, who is a member of the list and an approved liquidator. In any event, I have considered, on reflection, that the appointment of a new trustee would not resolve the situation. An impasse would remain. The taxation returns would not be signed by the plaintiff and he would continue to dispute the management and conduct of a new trustee.

120. Lastly, it must be borne in mind that Martyniuk is hopeful of a successful outcome before McDonald J on the reserved judgment. If the learned judge finds in favour of Martyniuk he will acquire two-thirds of the units and have a controlling interest in the trustee. On the other hand, if he is unsuccessful the matter will go to trial for ultimate determination and may not be heard for some time. The question is then to be asked what will happen to the trust in the meantime? On balance and bearing in mind the strict principles considered by the Court of Appeal I am satisfied subject to certain additional matters that it is appropriate that a receiver be appointed of the trustee as a matter of last resort.

123. The plaintiff relied upon the unreported judgment in Joseph and Ors v The Pelliman Group Pty Ltd, supra, where de Jersey J appointed a receiver of a trust but in circumstances where all parties supported the appointment of the receiver. The learned judge observed (at p.2):

"But the substantially supporting attitude of the beneficiaries and the existence of serious questions as to the validity of the present manager's position, though relevant considerations, are not definitive of the need for the appointment of a receiver. As relevant here, it is necessary for the applicants to demonstrate, in addition, that a receiver is necessary to ensure the security of the trust property ... ".

127. In my view it is not a detracting factor that one of the beneficiaries of the trust, namely Martyniuk, opposes with the utmost vigour the proposed appointment. Clearly he sees his position as much stronger if an appointment is not made and he is able to postpone such appointment pending determination of the reserve judgment by McDonald J. It is not known at this stage, when that judgment will be delivered. With respect, I adopt the observation of de Jersey J in Joseph and consider that the applicant has demonstrated that a receiver is necessary to ensure "the security of the trust property".

130. I consider it is desirable to have "someone impartial" who would make rational business decisions for the trust. It is desirable that that person be a person with undoubted business skills such as an official liquidator. Insofar as it may be suggested that the receiver if appointed would be vulnerable to overbearing or pressure from the warring parties the receiver can always return to the court and seek directions and advice.

133. On behalf of Martyniuk it was asked: what will the receiver do? In Glazier Holdings Pty Ltd v Australian Mens Health Pty Ltd (unreported judgment of Young J of the New South Wales Supreme Court dated 30 April 1998) the learned judge observed (at 4-5):

"The basic authority that a receiver is an officer of the court appears to be an Irish equity case of Hutchinson v Massareene (1809) 2 Ball & Beatty 55 (a report which is not available in Sydney). That decision was followed by Lord Eldon in Angel v Smith [1804] EngR 147; (1804) 9 Ves 335; 32 ER 632 and also in Davis v Marlborough [1819] EngR 678; (1819) 2 Swans 108, 118; [1819] EngR 678; 36 ER 555, 559. However, the furthest Lord Eldon seems to go is to say that receivers were like an officer of the court. In one sense they were like trustees, in that they owed fiduciary duties, but they were unlike trustees in that they had no property vested in them. They were, however, considered to be officers of the court in the United States. In Davis v Gray [1872] USSC 43; (1872) 83 US 203 at 217-218, Swayne J, giving the decision of the court, said that: 'A receiver is appointed upon a principle of justice for the benefit of all concerned ... [The receiver] is virtually a representative of the court, and of all the parties in interest in the litigation wherein he is appointed. He is required to take possession of property as directed, because it is deemed more for the interest of justice that he should do so than that the property should be in the possession of either of the parties in the litigation. He is not appointed for the benefit of either of the parties, but of all concerned. Money or property in his hands is in custodia legis. He has only such power and authority as are given him by the court, and must not exceed the prescribed limits. The court will not allow him to be sued touching the property in his charge, nor for any malfeasance as to the parties, or others, without its consent; nor will it permit his possession to be disturbed by force, nor violence to be offered to his person while in the discharge of his official duties.' I do not think that the status of the receiver is stated with any greater clarity than in that passage. The receiver seeks directions of the court as an officer of the court. However, his status as an officer of the court is not quite the same as other officers. I said in Moclair v Moclair, 18 December 1986, unreported, following Re St George (1887) 19 LR Ir 566, that receivers are officers of the court and they should resort to the court for guidance when they think it is desirable to do so. I stand by what I there said, but I think it should be appreciated that there is a difference between a liquidator, who is doing the work that last century the court did itself in the Master's Office, or even with a trustee, in that those people have unlimited functions, whereas a receiver has a very limited and usually relatively mechanical function. Instead of making a broad statement that receivers may always seek the opinion of the court, it would be better to put the proposition more narrowly, that if a receiver within his own limitations requires the guidance of the court, then normally he should have it. Accordingly, I do not consider that many of the cases dealing with the sort of advice that is given to trustees, on the one hand, or liquidators, on the other hand, necessarily apply in the case of applications by receivers to get advice. There are, of course, statutory rights for certain receivers under the Corporations Law to obtain the directions of the court under s.424 of the Corporations Law. This is not relevant to the present receiver. However it should be noted that even under that section the court does not give advice: Re North City Developments Pty Ltd (1990) 20 NSWLR 286; Re Geneva Finance Ltd (1992) 7 WAR 496. One must first look to see the order appointing and empowering the receiver to see what his limitations are. Traditionally courts have made orders appointing receivers only upon security, so that disappointed parties have access to a fund should the receiver not carry out his fiduciary duties. It has become customary to appoint official liquidators as receivers without security on the basis that their professionalism probably means that they will not create situations where they will be sued. However, the prime reason for granting security is that receivers are liable for breaches of fiduciary duty and it follows that they are not entitled to be completely indemnified against each step in carrying out their duties."

137. In my view in the present application having been satisfied that the assets of the trust are at risk because of the impasse between the relevant parties and the desire of the remaining director of the trustee to retire, the observations of Young J in Glazier Holdings demonstrates the type of role that a receiver could play in respect of the trust.

140. Weighing all these matters up, therefore, I consider that I am able to make a qualitative judgment that the assets of the trust are subject to a sufficient degree of jeopardy or risk as to warrant a receiver in all the circumstances. Insofar as it is necessary for me to do so I am satisfied that there is a serious question to be tried arising from the disputes between the parties in the substantive proceedings and as borne out by the pending judgment of McDonald J, alternatively, final judgment in the proceeding. So far as the balance of convenience is concerned I consider that the balance falls clearly in favour of the appointment of a receiver because of the risk that the assets of the trust face borne out by the current actual or potential insolvency of the trust. The issue of insolvency was disputed between the parties. This matter is dealt with in the affidavit of Mr Irving sworn 24 May 2000. In his affidavit Mr Irving deposes (at paragraphs 21 and 23) as to his belief that a debt of $50,000 and another debt of $105,000 may not be capable of being paid. The belief of Mr Irving in this respect is not rebutted. Further, there is a second matter that arises from the affidavit of Mr Irving (paragraph 23) where he deposes to the fact that the Commonwealth Bank of Australia has made a demand of approximately $609,000 together with interest and he explains the doubt as to the capacity to pay that debt. Furthermore, arising from the affidavit of Mr Irving it is revealed that there is additional doubt as to the capacity of the trust to re-pay moneys due to the estates of former occupants of the retirement village businesses.

143. An additional matter to be borne in mind in relation to the balance of convenience is the fact that the appointment of the receiver is on an interlocutory basis for a finite period. If Martyniuk succeeds in the reserved judgment of McDonald J the appointment in all likelihood will be for a relatively short period. If Martyniuk fails it could be reasonably anticipated that the matter would be fixed for trial in the not too distant future. Again, the appointment of a receiver would be for a finite period and intended to preserve the assets of the trust pending final determination of the proceeding.

146. In any event, an additional observation is to be made that unlike disputes in commercial litigation where the appointment of a receiver is sought the present matter is concerned with a trust. Consideration of the authorities does not make the position clear as to whether the court applies the usual injunctive test, that is, determining whether there is a serious question to be tried and assessing the balance of convenience. It is to be observed that the authorities in relation to the appointment of a receiver of the assets and undertakings of a trust reflect a concern at the outset to protect the assets of such a trust. For the reasons already stated I am satisfied in the present matter that a receiver ought be appointed to provide the necessary interim protection.

149. Before making any final orders I would need to be satisfied as to the form of order proposed by the applicant.

152. There is the matter of the proffering of an undertaking as to damages. No such undertaking was proffered or considered in the course of argument before me. In Bond the Appeal Division considered the requirement of the proffering of an undertaking as to damages as the price of the appointment of a receiver (at 559-560):

"The order appointing the receivers operated as an injunction:. see the decisions cited in Picarda, Receivers and Managers, pp. 274-5. The usual undertaking as to damages is the price that must be paid by almost every applicant for an interim or interlocutory injunction. An injunction will by its nature require a person to do or abstain from doing some act and so is by its nature an order with a tendency to prejudice the person to whom it is directed. The practice of requiring the undertaking recognises that, the injunction being only interim or interlocutory and so the rights of the parties not having been finally determined, it may at a later stage appear that the applicant should in fairness compensate the party enjoined for the harm he has suffered: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249, at p.311, per Gibbs J. The principles governing the enforcement of the undertaking, are discussed in Spry, Equitable Remedies_,_ 3rd. ed., Appendix A. In Chapman v Rose-Snider Fur Co. 69 DLR 639, at p.641 (cited by Picarda, p.268) Middleton J of the Supreme Court of Ontario said that any ex parte order appointing a receiver, operating in effect as an injunction, should contain an undertaking as to damages. For examples of the undertaking in damages on the interim appointment of a receiver see Taylor v Eckersley (1876) 2 Ch. D. 302; Evans v Lloyd [1889] WN 171; Seton, Judgments and Orders, 7th ed., vol. 1, p.727, Form 6 and Atkins Court Forms, 2nd ed., vol. 33 (1989 issue), p.205, Form 20, and Practice Paragraph 10. Even where a statute authorising the appointment of a receiver on the application of a public authority directs the court not to insist on the usual undertaking as to damages, it has been said that the court may in exercising its discretion take into account whether an undertaking is offered: Corporate Affairs Commission (NSW) v Lombard Nash International Pty Ltd (1986) 11 ACLR 566, at p.571. Property over which a receiver is appointed may not be in the actual enjoyment of anyone, and the circumstances in which a receiver may be appointed are infinite in their variety. This case can be disposed of without considering whether any general assertions can safely be made about the circumstances in which an interim or interlocutory order appointing a receiver should be supported by the usual undertaking in damages. For it is clear that the present order operated as an injunction against the defendants at a time when there had been no final determination of rights and had such a prejudicial tendency so far as they were concerned as to require imperatively the exaction of the undertaking. The great danger of great prejudice need riot be enlarged upon: it is too obvious."

156. I would need to hear further submission from the parties on the question as to undertakings as to damages. Notwithstanding that the present case is one concerned with the management of a trust as distinct from financial arrangements between banker and customer as was the case in Bond the relief is nevertheless draconian and in the nature of an injunction. On the basis of the principle stated by the Appeal Division it is difficult to contemplate circumstances that might be put before the court to persuade me against requiring the proffering of an undertaking. The observation can be readily made that the plaintiff will say that his interests in the trust are at risk if a receiver is appointed it being in the nature of a step in in solvency.

159. Subject to being satisfied as to the form of the order setting out the powers of the receiver and the proffering of an undertaking as to damages I will order the appointment of a receiver.

[1] Evans v Coventry [1854] EngR 968; (1854) 3 Drew 75; see, too, Wright v Vernon [1855] EngR 187; (1855) 3 Drew. 112.

[2] Tullett v Armstrong [1836] EngR 976; (1836) 1 Keen 428; Owen v Homan [1853] EngR 883; (1853) 4 H.L.C. 997, 1032.

[4] Brodie v Barry [1811] EngR 481; (1811) 3 Mer 695, 36 ER 267; Browell v Reed [1842] EngR 329; (1842) 1 Hare 434, 66 ER 1102; Tait v Jenkins (1842) 1 Y and CCC, [1842] EngR 462; 62 ER 985; Cole v Muddle [1852] EngR 861; (1852) 10 Hare 186 at 190[1852] EngR 861; , 68 ER 892.

[5] Re Fowler (1881) 16 Ch D 723.

[6] Middleton v Dodswell [1806] EngR 376; (1806) 13 Ves 266, 33 ER 294; Richards v Perkins (1838) 3 Y and C Ex 299[1838] EngR 1078; , 160 ER 716; Swale v Swale [1856] EngR 727; (1856) 22 Beav 584; 52 ER 1233.

[7] Middleton v Dodswell supra; Barkeley v Reay [1843] EngR 265; (1842) 2 Hare 308, 67 ER 127.

[11] Middleton v Dodswell, supra; Barkley v Reay; Re Gradfan Pty Ltd (in liq); Nilant v Miling Nominees Pty Ltd (1996) 20 ACSR 689 at 702-3 per Steytler J, SC(WA).

[12] Attorney-General v Schonfeld, supra.

[13] Day v Croft [1840] EngR 593; (1840) 2 Beav 488; 48 ER 1271; Swale v Swale, supra; Hart v Denham [1871] WN 2, CA; In the Estate of Just (dec'd) (No 1) (1973) 7 SASR 508 at 415-15 per Jacobs J.

[14] Sheppard v Oxenford [1855] EngR 362; (1855) 1 K & J 491; 69 ER 552.

[15] Middleton v Dodswell, supra; Smith v Smith [1836] EngR 1054; (1836) 2 Y & C Ex 353; Bainbridge v Blair (1835) 4 LJ Ch 207.

[16] Middleton v Dodswell, supra; Browell v Reed, supra.

[17] Tidd v Lister [1820] EngR 603; (1820) 5 Madd 429.

[18] Anon (1806) 12 Ves 4; Richards v Perkins, supra; Brooker v Brooker [1857] EngR 310; (1857) 3 Sm & G 475; Rawson v Rawson (1864) 11 LT 595; Harris v Harris (1887) 56 LJ Ch 754, 35 WR 710.

[19] [1985] ICR 606. An earlier ex parte appointment was upheld by the Court of Appeal: Clarke v Heathfield [1985] 1 ICR 203, CA.

[20] Evans v Coventry [1854] EngR 1034; (1854) 5 De GM & G 911, 3 Eq Rep 545.

[21] Brooker v Brooker [1857] EngR 310; (1857) 3 Sm & G 475 at 477.

[22] Everett v Prythergch [1841] EngR 1237; (1841) 12 Sim 363.

[23] (1845) 6 LT OS 185, 10 Jur 3; and see Re Moxley's Goods [1916] 2 IR 145.