MCROBERT SUPERANNUATION PTY LTD -v- CRANSTON [2021] WASCA 126 (21 July 2021)

(a) foregoing the right to receive a minimum rent of $80,000 per annum under the lease; and

1. Also relevant to this appeal, the appellants pleaded that the conduct of the development in accordance with the Trust Deed was an unregistered managed investment scheme that was required to be registered under the Corporations Act 2001 (Cth).[10] The appellants pleaded that Giorgi, in operating the scheme, was in contravention of s 601ED(5) of the Corporations Act.[11]
2. The appellants also pleaded a panoply of alleged breaches of the Trade Practices Act 1974 (Cth), the Australian Consumer Law, the Australian Securities and Investments Commission Act 2001 (Cth) and the Fair Trading Act 1987 (WA).[12] Mercifully, those allegations do not feature in the appeal.
3. The appellants' action was tried by Smith J in February 2019.[13]
4. The respondents, at trial, conceded that Giorgi's conduct in agreeing to the agreed variations were a breach of its fiduciary duty (in particular, by foregoing the lease with a minimum rent of $80,000 per annum). The respondents pleaded, however, that Mr McRobert, on behalf of the first and second appellants, consented to, or acquiesced in, that breach.
5. In that context, the learned trial judge found that it was only necessary to find that Mr McRobert and Tony Arias (Mr Arias) (the owner of MPD Pty Ltd) knew and consented to the agreed variations as they each (together with Mr Cranston and their respective entities) were the only beneficiaries of the Giorgi Trust immediately prior to, and at the time of, the variations.[14] There was no doubt that Mr Arias had so consented; he gave evidence to that effect on behalf of the respondents.[15]
6. The learned trial judge found that Mr McRobert also consented to, and acquiesced in, the variations to the 30 January 2009 contract. Her Honour found that Mr McRobert consented to the changes to the agreement with ARF Ltd and that he had knowledge of the breach and that he was fully informed.[16]
7. In reaching those findings, the learned trial judge made a number of credibility findings. In particular, her Honour found that:

(a) Mr McRobert's evidence was unreliable and not credible;[17]

(b) Mr Cranston and Mr Arias were generally credible witnesses;[18] and

(c) Mr Cranston's evidence was reliable, as his evidence was, in material respects, corroborated by contemporaneous documents and, in part, by uncontradicted evidence given by Mr Arias.[19]

1. As a consequence of the finding that Mr McRobert had consented to and acquiesced in the breach of fiduciary duty, the learned trial judge held that the appellants were estopped from pursuing a claim in equity against the respondents for breach of trust.[20] Her Honour also concluded that there were no special circumstances entitling the appellants to bring an action against Mr Cranston and Kingslane for the benefit of Giorgi, as trustee, on behalf all of the beneficiaries for their involvement in the breach of the Giorgi Trust.[21]
2. The alternative claim, that Giorgi was operating an unregistered managed investment scheme in contravention of s 601ED(5) of the Corporations Act, arose in the following statutory context.
3. Section 601ED of the Corporations Act relevantly provides:

601ED When a managed investment scheme must be registered

(1) Subject to subsections (2) and (2A), a managed investment scheme must be registered under section 601EB if:

(a) it has more than 20 members; or

(b) it was promoted by a person, or an associate of a person, who was, when the scheme was promoted, in the business of promoting managed investment schemes; or

(c) a determination under subsection (3) is in force in relation to the scheme and the total number of members of all of the schemes to which the determination relates exceeds 20.

(2) A managed investment scheme does not have to be registered if all the issues of interests in the scheme that have been made would not have required the giving of a Product Disclosure Statement under Division 2 of Part 7.9 if the scheme had been registered when the issues were made.

1. It was common ground at trial that the Giorgi Trust was a managed investment scheme and that neither s 601ED(1)(a) nor s 601ED(1)(c) applied in the present case. The issue as to whether the scheme was required to be registered therefore turned on:

(a) whether Mr Cranston was 'in the business of promoting managed investment schemes' within the meaning of s 601ED(1)(b); and

(b) whether all of the issues of interests in the scheme that had been made did not require the giving of a Product Disclosure Statement (PDS) under div 2 of pt 7.9 within the meaning of s 601ED(2).

1. The answer to the second of these issues (i.e. whether a PDS was required), depended upon whether each of the offers to join the Giorgi Trust was a 'personal offer' within the meaning of s 1012E of the Corporations Act.
2. Section 1012E(5) defines personal offer to mean:

For the purposes of subsections (2) and (4), a personal offer is one that:

(a) may only be accepted by the person to whom it is made; and

(b) is made to a person who is likely to be interested in the offer, having regard to:

(i) previous contact between the person making the offer and that person; or

(ii) some professional or other connection between the person making the offer and that person; or

(iii) statements or actions by that person that indicate that they are interested in offers of that kind.

1. The learned trial judge held that the Giorgi Trust was a managed investment scheme but concluded that it was exempt from registration. As to the first issue her Honour concluded that there was some evidence to conclude that Mr Cranston was in the business of promoting managed investment schemes, but did not finally determine that question.[22] That was because her Honour concluded that the issue of interests in the scheme did not require a PDS. Relevantly, in that context, her Honour concluded that the offers made to retail investors and potential retail investors in the Giorgi Trust were all 'personal offers' within the meaning of s 1012E(5) of the Corporations Act.[23]
2. Finally, notwithstanding that the appellants' action failed, her Honour concluded that the Giorgi Trust terminated on 29 July 2013 and that the property of the Trust was to be distributed in accordance with the Trust Deed.
3. The appellants appeal from the dismissal of their claim for relief in equity and under the Corporations Act.
4. Before turning to the grounds of appeal, it is necessary to set out some of the relevant facts and findings in more detail.

1. In 2007, Lot 2009, and the adjoining lot, Lot 2010 Giorgi Road, Picton (Lot 2010) were zoned 'general farming'. Lot 2009 was owned by ARF Ltd and Lot 2010 was owned by the Southwest Development Corporation (LandCorp).
2. Lots 2009 and 2010 can be seen on Deposited Plan 43721:[24]

1. Lot 2009 is the rectangular lot in the north‑western corner of the plan, and is surrounded on its eastern and southern border by Lot 2010.
2. Mr McRobert is a town planning consultant who, at all material times, worked from Bunbury.
3. In mid‑2007, Mr McRobert was engaged by LandCorp, with the consent of ARF Ltd, to apply to the Shire of Dardanup to initiate an amendment to the Shire's planning scheme to rezone Lot 2009 and Lot 2010 from 'general farming' to 'development zone'.[25] The objective of the amendment was to facilitate further development within the Picton Industrial/Enterprise Park.[26]

1. In early 2008, Mr McRobert was introduced to Mr Cranston by Greg Mason (Mr Mason), a real estate agent in Bunbury. Mr Cranston was looking for investment opportunities in the Bunbury area. Mr Cranston and Mr McRobert became firm friends and discussed land development projects and investment opportunities.[27]
2. In about mid‑2008, Mr Mason told Mr Cranston there was an opportunity to purchase Lot 2009 and that it had development potential as an industrial subdivision.[28] Mr Cranston, in turn, encouraged Mr McRobert to set up a business with other planners to work on projects in which Mr Cranston had an interest. The first proposed project was the development of Lot 2009.[29]
3. After some initial involvement of Mr Mason, Mr Cranston began to negotiate directly with ARF Ltd, through its then chief executive officer, Max Ger (Mr Ger). In late‑2008, Mr Cranston, Mr McRobert and Mr Arias began to discuss the purchase of Lot 2009 by their respective entities. Mr Arias is a property developer and property consultant, who is a close business associate of Mr Cranston and had also known Mr McRobert since the 1980s.[30]
4. It was agreed between Mr Cranston, Mr McRobert and Mr Arias that the best vehicle to purchase Lot 2009 would be to incorporate Giorgi as a company (as purchaser) and for the purchase to be in a trust, which would provide ownership of lots to beneficiaries. On 10 December 2008 Giorgi was registered, with Mr Cranston as sole director and secretary.[31]
5. At around the same time, Mr McRobert and Mr Arias undertook work in relation to the suitability of Lot 2009 for subdivision. Mr McRobert also drew up plans for subdivision, the majority of which proposed 26 lots. One of those plans was ultimately annexed to the Trust Deed and depicted the proposed lots as follows:[32]

1. As is apparent from the proposed plan, the largest lot was Lot 26, which contained the biodiesel plant operated by ARF Ltd.

1. The Trust Deed was executed by Robert Barry (Mr Barry) as settlor. Mr Barry was Mr Cranston's accountant. Mr Cranston's evidence was that the Trust Deed was executed on 29 January 2009 (the date that it bears) and that he executed the Trust Deed on the same day on behalf of Kingslane.
2. Despite their pleading, the appellants contended at trial that the Trust Deed was in fact executed on a date after 29 January 2009. The learned trial judge rejected that contention.[33] Significant among her Honour's findings in that context were the following:[34]

I am satisfied that when the Giorgi Trust Deed was executed the only schedule of beneficiaries in the Giorgi Trust Deed was a schedule of capital beneficiaries, which listed Kingslane (as trustee for the Cranston Family Trust), [MPD Pty Ltd] (as trustee for the MPD Trust), and Mr and Mrs McRobert (as trustees of the McRobert Family Trust).

Upon execution by Kingslane and [MPD Pty Ltd], the trust possessed all the necessary characteristics of a trust, namely that the intention to create a trust was clear, the property the subject of the trust was certain and it was reasonably certain who the capital beneficiaries were.

1. The Trust Deed identified a number of 'lot beneficiaries' who were obliged to make an 'Initial Lot Contribution' on execution of the Trust Deed and a 'Balance Lot Contribution' in return for transfer of specified lots on the creation of certificates of title for subdivided lots.[35] Kingslane was identified as a lot beneficiary for Lot 26 with a required Initial Lot Contribution (ex GST) of $780,000.[36]

1. The following day, ARF Ltd accepted Giorgi's offer to purchase Lot 2009, thereby forming the 30 January 2009 contract. The purchase price was $3.3 million (GST inclusive). While the contract was not subject to finance it was common ground that an application for finance would be made to finance at least part of the purchase price and the development. An application for finance was subsequently made to the National Australia Bank (NAB).[37]
2. The following special conditions in Annexure A also formed part of the 30 January 2009 contract:[38]

At Settlement, the Buyer grants a Lease of that portion of the Land comprising the Bio‑Diesel Plan (the Lease) to the Seller on the following terms:

(a) The initial term is five (5) years with four x five (5) year options to renew, exercisable by the Seller;

(b) The initial rent is $80,000 per annum, plus GST plus rates and taxes;

(c) Yearly rent increases are to be calculated as follows:

(i) in accordance with CPI on each anniversary of the commencement date except on the commencement of any new term; and

(ii) in accordance with a market rent review at the commencement of each new term.

(d) The Seller shall have an option, exercisable within 12 months of Settlement Date, to lease an additional 10,000 square metres of land (Additional Lease Area), which Additional Lease Area is to be a part of the Land that is immediately adjacent to the Bio‑Diesel Plant, under the same terms and conditions as contained in the Lease, with rent on such Additional Leased Area to be calculated on a pro rata basis.

The Buyer is to prepare a formal lease incorporating the terms set out in clause 2.1, and otherwise being to the reasonable satisfaction of the parties, as soon as reasonably practicable following Settlement.

7.1 Nothing in this Contract transfers any rights, title or interest in the Bio‑Diesel Plant to the Buyer (notwithstanding that the Bio‑Diesel Plant may be affixed to the Land) and all rights, title and interest in the Bio‑Diesel Plant shall remain vested in the Seller at all times.

7.2 The Seller may enter onto the Land and remove the Bio‑Diesel Plant at any time but in doing so the Seller must make good any damage it may do to the Land.

7.3 The full terms giving effect to clauses 7.1 and 7.2 will be included in the lease referred to in clause 2.2.

1. Also around this time, the parties explored the prospect of other persons investing in the development of Lot 2009. On 13 February 2009 Mr Cranston, Mr McRobert and Mr Arias met with a George Chaffey (Mr Chaffey). Mr Chaffey initially agreed to invest in the project. Each of the investors contributed to the deposit for the purchase of Lot 2009.[39] Mr Chaffey later withdrew from the development and Mr Cranston arranged for a refund of his share of the deposit.[40]
2. There was evidence of other persons investing in, or being approached to invest in, the Giorgi Trust at various points throughout 2009. These included Ms Colleen Jackson (Ms Jackson),[41] Mr Morris (whose estate is one of the fourth respondents),[42] Stuart Cuthbert (Mr Cuthbert),[43] Mr Weaver,[44] Gary Bandy (Mr Bandy)[45] and Kim Norton (Mr Norton).[46]
3. The entry, or proposed entry, of these other persons into the investment had the result that there were, at different times, a variety of schedules of lot beneficiaries prepared identifying the beneficiaries of the Giorgi Trust.[47] The significance, or otherwise, of the other investors is dealt with later in these reasons.
4. On 23 March 2009, the 30 January 2009 contract became unconditional and settlement was then due within 14 days (5 April 2009). The 30 January 2009 contract did not, however, settle in April 2009.[48]

ARF Ltd seeks to renegotiate the contract for the sale of Lot 2009

1. By that time, Tom Engelsman (Mr Engelsman) had become a director of ARF Ltd and had taken over responsibility for Lot 2009 from Mr Ger. Mr Engelsman spoke with Mr Cranston and advised that ARF Ltd would have difficulty paying the agreed rent of $80,000 per annum. He wished to renegotiate the contract.[49]
2. Mr Cranston gave evidence that, in April 2009, he discussed with Mr McRobert and Mr Arias the meeting that he had with Mr Engelsman. Mr Cranston said that Mr McRobert and Mr Arias each agreed to proceed to renegotiate the terms of the contract to purchase Lot 2009 as potentially it could result in the purchase of Lot 2009 on more favourable terms.[50] Whether Mr McRobert had knowledge of the negotiations between Mr Cranston and Mr Engelsman, and their outcome, was a central issue of fact at trial.
3. On 16 April 2009, Mr McRobert signed the Trust Deed. At the time the terms of the 30 January 2009 contract had not been varied, although settlement was overdue.[51]
4. Over the course of the next two months Mr Cranston negotiated with Mr Engelsman, on behalf of ARF Ltd, in relation to proposed changes to the agreement between the parties.
5. Some of those negotiations took place in writing, by email. That correspondence was, in turn, forwarded to Mr McRobert. For example, on 22 May 2009, Mr Engelsman caused to be sent to Mr Cranston an email stating, inter alia:[52]

As per our conversation this morning, I have suggested the following alternative for the same;

1. ARF would sell your company the 7.4 hectares (approx) of un‑used land and retain for its own use the residual 2.6 ha, currently being used for the plant;
2. The payment for this 7.4 ha would be on a pro rata basis on the current agreed sale price;
3. ARF would give your company first right of refusal to purchase the residual 2.6 ha as and when ARF finally decides to vacate the land;
4. On the basis of the above there would be no required indemnification from your company and all remediation work required for the final 2.6 ha would be the responsibility of ARF.
5. Mr McRobert was provided with this email and discussed it with Mr Cranston on 25 May 2009. Later that day, Mr McRobert sent Mr Cranston an email, in which he stated:[53]

Hi Mate

Just one question that came to mind following our discussion this morning.

Will we be indemnified in relation to any contamination etc generated from the lake which would fall outside the 2.6ha they want?

Regards

Andrew McRobert

1. Negotiations between Mr Engelsman and Mr Cranston continued into early June 2009, including by way of emails that were, in turn, forwarded to Mr McRobert.[54]
2. In that regard, on 4 June 2009, Mr Engelsman sent an email to Mr Evan Cranston (Mr Cranston's son) with a copy to Mr Cranston which said:[55]

Evan/John

Sorry, but I have been somewhat busy with the Rights Issue release, and hence the 'black out'.

May is currently finalising the docs on the basis of the concept

1. ARF sells the whole parcel of land to the Trust.
2. ARF is nominated as the Plot Beneficiary for the land under the plant.
3. ARF then enters into the Lease Agreement with Lakeside for the same terms etc as per the last lease agreement (see comments below).
4. At the time of sub-division, ARF would have the right to buy the land parcel under the plant.
5. At the end of the 20 year period Lakeside would have first right of refusal with regard to a land sale.
6. All remediation obligations for the land are to regulations at the time, and [sic] ARF responsibility/cost.

The Lease Agreement is the most recent version, and still contains the contested indemnifications clauses. Please note that I have asked May to simply attach the last version sent, so that at least we have a consistent set of documents, realising that these items are going to have to reflect the fact that ARF carries the remediation obligation at the time of the sale.

With the release of the Rights Issue today, and the overall timing/work on that, we will need to have closure with regard to the land sale next week, since it could be a material notice - one way or the other. I am going to be in Perth from Tuesday evening next week, and hope that we can have the contracts signed on Thursday.

I realise that there are open items with regard to the above, and therefore suggest that we get the lawyers working (on the assumption that the above format is generally acceptable).

Regards,

Tom

1. Mr Cranston forwarded this email to Mr McRobert on 5 June 2009. In the forwarding email, Mr Cranston stated:[56]

1. The reference in Mr Engelsman's 4 June 2009 email to 'Lakeside' was a typographical error and was a reference to 'Kingslane'. Mr Cranston gave evidence that he and Mr McRobert discussed the email and 'laughed about Mr Engelsman's interpretation of Kingslane being Lakeside'.[57]
2. Mr Cranston also gave evidence that he and Mr McRobert discussed the lease changing from $80,000 per annum to a $1 peppercorn lease in return for ARF Ltd reducing the purchase price by $780,000.[58] Mr McRobert denied that he had been so informed,[59] although he later gave evidence that he was shown a copy of a draft of the lease, dated 19 June 2009, by Mr Cranston, at about that time, that reflected the varied terms of the contract between ARF Ltd and Giorgi.[60]
3. There was a significant contest at trial as to whether Mr Cranston continued to keep Mr McRobert apprised of the state of the negotiations after 10 June 2009. Mr McRobert gave evidence that he was cut out of all communication concerning the negotiations to vary the terms of the contract after that date. The respondents' case, supported by the evidence of Mr Cranston and Mr Arias, was that Mr McRobert was included in all such communication. As we have already noted, the learned trial judge preferred the evidence of Mr Cranston and Mr Arias in that regard.
4. Her Honour's preference for the evidence of Mr Cranston and Mr Arias, and the consequences for the appellants' claims, are the subject of the grounds of appeal and are addressed later in these reasons.

The agreed variations to the 30 January 2009 contract

1. The negotiations between Mr Cranston and Mr Engelsman to vary the 30 January 2009 contract were concluded on 25 June 2009. The agreed variations were contained in the Side Letter, the Transfer Deed, the Option Deed and the lease.[61]
2. The Side Letter (dated 25 June 2009) stated:[62]

Dear Sirs

SIDE LETTER TO TRANSFER DEED AND LAND SALE CONTRACT

We refer to the Transfer Deed to be dated on or about 25 June 2009 ('Transfer Deed') between Australian Renewable Fuels Ltd, Kingslane Pty Ltd as trustee for the Cranston Family Trust and Giorgi 2009 Pty Ltd.

All capitalised terms used in this letter have the same meaning given to those terms in the Transfer Deed, unless otherwise defined in this letter.

We refer to clause 2.3 of the Transfer Deed and propose that the Trustee is to procure the written consent of its mortgagee, which is lending funds to the Trustee for the purchase of the Land, to:

(a) the transfer of the interest of the 'Beneficiary' in Lot 26 under the Trust Deed to ARF, with effect on and from the Settlement Date;

(b) the registration of the Lease with Landgate by ARF (or its nominated subsidiary) on the Settlement Date; and

(c) the discharge of any securities granted over Lot 26, at the time of the transfer of legal title to Lot 26 from the Trustee to ARF,

within 14 days from the date of the Transfer Deed, or such other date as mutually agreed between the parties to the Transfer Deed.

We refer to Special Condition 2 of the Contract relating to the lease and propose that Special Condition 2 of the Contract be deleted. The terms of the lease with respect to the Land are now set out in the Lease to be dated on or about 25 June 2009.

1. The material terms of the Transfer Deed relevant to the issues at trial were:[63]

1. On 30 January 2009, the Trustee entered into the Contract with ARF to buy the Land, and which includes Lot 26.
2. The Land is to be subdivided by the Trustee in accordance with the Subdivision Plan to create Lot 26.

1. Under the Trust Deed, Kingslane is a Lot Beneficiary in relation to Lot 26.

1. On the Settlement Date, the Trustee will transfer its beneficial interest under the Trust Deed to Lot 26 to ARF. 2. On the Settlement Date:

(a) the Trustee and ARF agree to enter into the Lease, and ARF agrees to procure the entry into the Lease by its nominated subsidiary; and

(b) that ARF agrees to pay to Kingslane the sum of $780,000 exclusive of GST in consideration of the transfer of the beneficial interest of Lot 26 under the Trust Deed from Kingslane to ARF.

1. Kingslane consents to the Trustee leasing Lot 26 to ARF (or its nominated subsidiary) in accordance with the terms of the Lease.

2. If Subdivision of the Land occurs and a certificate of title in respect of Lot 26 issues from Landgate, then the Trustee and ARF agree to:

(a) terminate the Lease; and

(b) transfer the certificate of title to Lot 26 from the Trustee to ARF, in accordance with the terms of this Deed.

2.1 Kingslane, a Lot Beneficiary in the Giorgi 2009 Trust, established by the Trust Deed hereby agrees to transfer all of its beneficial interest as a Lot Beneficiary of Lot 26 to ARF absolutely on the Settlement Date in consideration of the payment of the sum of $780,000 exclusive of GST.

2.2 The Trustee hereby consents to the transfer of the interest of the 'Beneficiary' in Lot 26 under the Trust Deed to ARF, with effect on and from the Settlement Date, and hereby consents to the registration of the Lease with Landgate by ARF (or its nominated subsidiary) on the Settlement Date.

3.1 Effective from the Settlement Date, the Trustee and ARF (or ARF's nominated subsidiary) agree to enter into the Lease.

3.2 Kingslane hereby consents to the Trustee leasing Lot 26 to ARF (or its nominated subsidiary) in accordance with the terms of the Lease.

3.3 If Subdivision of the Land occurs:

(a) the Trustee shall transfer legal title to Lot 26 from the Trustee to ARF as soon as is reasonably practicable, and procure, at the time of the transfer, the discharge of any securities granted over Lot 26;

(b) the Lease will immediately terminate on the date of transfer of the legal interest in Lot 26 from the Trustee to ARF; and

(c) the rights and obligations of the parties to the Lease which have accrued up to the date of settlement of Lot 26 will survive the termination of the Lease.

1. If ARF subsequently holds the title to Lot 26 following the completion of the Subdivision, Kingslane is granted an option on and from settlement of Lot 26 in accordance with the terms of an option to purchase Lot 26 entered into by Kingslane and ARF dated on or about the date of this Deed.

1. The option referred to in this clause of the Transfer Deed (clause 4) was granted by the Option Deed, the parties to which are ARF Ltd and Kingslane. Pursuant to the Option Deed, ARF granted to Kingslane its nominees and assignees (the option holder) the option for the option holder, subject to the completion of the subdivision of Lot 2009, to purchase Lot 26 for the sum of $780,000 (indexed to increases in the CPI) during each of a number of specified six month periods.[64]
2. The final document in the suite of documents giving effect to the agreed variations was the lease. The terms of the lease were to the following effect:[65]

(a) the parties are Giorgi (as lessor), ARF Picton (as lessee) and ARF (as guarantor);

(b) ARF Picton leased the property for the term (20 years from the commencement date) subject to the payment of rent for the term in the sum of $1; and

(c) ARF Picton agreed to remediate any contamination on the land and to indemnify Giorgi in respect of any loss, injury or damage to any person caused by contamination on the land.

1. The learned trial judge identified the material terms of the agreed variations in the following terms:[66]

(a) ARF Ltd was to be nominated as the lot beneficiary for the land upon which the biodiesel plant was situated (proposed Lot 26);

(b) the initial contribution for payment as the proposed lot beneficiary of Lot 26 (in item 4 of the schedule to the Giorgi Trust Deed) was to be payable as a deduction of $780,000 (exclusive of GST) of the purchase price, calculated on a pro‑rata basis of the original agreed purchase price;

(c) the term of the lease of land, of proposed Lot 26, was to be for a period of 20 years and to expire on the earlier of the period of 20 years or upon completion of the subdivision and transfer of Lot 26 to ARF Ltd;

(d) the rent for the term of the lease was to be $1 (exclusive of GST);

(e) ARF Ltd was to grant to Kingslane an option to purchase Lot 26 for the sum of $780,000 (exclusive of GST) and indexed to increases in CPI, subject to subdivision of proposed Lot 26; and

(f) ARF Picton was to become contractually bound by the terms of the lease (in relation to which ARF Ltd is a party to the lease as guarantor) to be responsible for and indemnify Giorgi in respect of any loss, injury or any damage caused by contamination on Lot 2009.

1. It was Giorgi's conduct in agreeing to these variations that the appellants alleged (and the respondents conceded) was a breach of Giorgi's fiduciary duty. It was, in turn, those variations that the respondents contended that Mr McRobert had consented to or acquiesced in.

1. At the time of the agreed variations the beneficiaries of the Giorgi Trust were those entities associated with Mr Cranston, Mr McRobert and Mr Arias.
2. Following the variations, applications for finance were made to NAB. Mr Cranston earlier had contact with NAB in relation to the proposed development in May 2009.[67] In that context, as the learned trial judge found, NAB were provided with incorrect information in relation to the terms of the lease (and, in particular, the suggestion that if the subdivision was not completed within 24 months, the rent under the lease would revert to $80,000 per annum).[68]
3. In addition, after the agreed variations but prior to settlement, a number of other persons were invited to invest in the development as capital beneficiaries, some of whom did become capital beneficiaries (see [49] above). Those who took up an investment (prior to settlement) included Mr Morris and Mr Cuthbert. Mr Cuthbert invested through Redmont Resources Pty Ltd as trustee for both the Cuthbert Investment Trust and the Civmec Self‑Managed Superannuation Fund.
4. The 30 January 2009 contract was settled on, or about, 15 September 2009.[69] The settlement statement prepared for the settlement appeared as follows:[70]

Less Australian Renewable Fuels land buy back @ $780,000.00 plus GST

1. The contributions totalling $2,197,531.67 were recorded as having been contributed in the following proportions:[71]

1. These contributions reflect all of the capital beneficiaries who are parties to this appeal, other than Morara Pty Ltd, the beneficiary associated with Mr Weaver. Morara Pty Ltd became a beneficiary after settlement, by way of an assignment of part of Mr McRobert's interest.[72]
2. As can be seen from the settlement statement, the reduction in the purchase price of $780,000 plus GST ($858,000) - that formed part of the effect of the agreed variations - was described as a 'buy back' of a portion of Lot 2009 (i.e. Lot 26 in relation to which Kingslane transferred its beneficial interest to ARF Ltd under the Transfer Deed).
3. While described as a 'buy back' in the settlement statement (and an invoice issued by Giorgi to ARF Ltd on 9 September 2009),[73] in actual fact the 'buy back' amount reflected the net effect of three payments that otherwise would have been required by the agreed variations (which would have involved something akin to a 'round robin' of payments). That is, as the learned trial judge described it,[74] ARF Ltd was paid a reduced purchase price at settlement in lieu of:

(a) Kingslane paying the initial lot contribution of $780,000 (plus GST) to Giorgi;

(b) Giorgi paying the same amount to ARF for the purchase of the land; and

(c) ARF Ltd paying Kingslane the same amount under cl 2.1 of the Transfer Deed.

1. Before setting out the relevant findings made by the learned trial judge, it is necessary to say something about the appellants' case, at trial, as it related to:

(a) the alleged breach of fiduciary duty against Giorgi; and

(b) the claim against Mr Cranston and Kingslane sought to be brought for the benefit of Giorgi.

Pleaded case Pleaded case - breach of fiduciary duty

1. As noted at the outset, the appellants' case at trial was that Giorgi was in breach of its fiduciary duties by entering into the agreed variations. In that regard the relevant pleadings are those found in pars 71 to 74 of the Statement of Claim:[75]
   1. By reason of the Trustee entering into the Transfer Deed and the Side Letter, including the agreement in clause 4 of the Transfer Deed to the grant of the Option to [Kingslane] pleaded in paragraph 50.7 above, the Trustee:

71.1 agreed to the Beneficiaries receiving no rent under the Lease of Lot 26 for the entire Term of the Lease, despite the Trust Deed contemplating that they would receive rent of at least $80,000 per annum under the agreement for lease of Lot 26 in Special Condition 2 of the Contract of Sale; and

71.2 procured that [Kingslane] acquire the benefit of the Option as a component of the transaction effected by the Transfer Deed and the Side Letter.

1. By reason of the conduct of the Trustee in failing to terminate the Lease when entitled to do so as pleaded in paragraphs 37 ‑ 48 above, the Trustee has:

72.1 continued and exacerbated the detrimental effect on the Beneficiaries of the effect of the conduct pleaded in paragraph 71.1, which effect may by reason of the matters pleaded in paragraph 76 below continue until after expiration of the Term of the Lease; and

72.2 engaged in the conduct pleaded in paragraphs 37 ‑ 48 above to the benefit of [Kingslane], by not causing issues as to the enforceability of the Transfer Deed and the Option Deed arising from matters pleaded in paragraphs 51.1 and 76 herein to be considered by ARF and ARF Picton upon the Lease being terminated by the Trustee.

1. As trustee of the Trust, [Giorgi] owed and owes to the Beneficiaries other than [Kingslane]:

73.1.1 carry out, and act in accordance with the terms of the Trust Deed;

73.1.2 act with due care, skill and diligence and for proper purposes; and

73.2 a fiduciary duty to not confer a benefit on 1 Beneficiary ([Kingslane]) by causing loss to the other Beneficiaries.

1. By engaging in the conduct pleaded in paragraphs 71 and 72, [Giorgi] breached the duties pleaded in paragraph 73.
2. The breach alleged in par 72 of the Statement of Claim, related to conduct alleged to have occurred in 2016,[76] after the date upon which the learned trial judge concluded that the Giorgi Trust had terminated. For that reason, the alleged breach in par 72 fell away.[77] It forms no part of the appeal. Accordingly, par 72 of the Statement of Claim may be put to one side.
3. The breach upon which the case at trial turned was therefore the breach pleaded at par 71 of the Statement of Claim.
4. It is that breach that the respondents conceded had occurred. It was also that breach in relation to which the respondents pleaded that Mr McRobert consented to and acquiesced.[78]
5. Two observations should be made about the breach pleaded in par 71 of the Statement of Claim.
6. First, the alleged breach was confined to the variations agreed between Mr Cranston and ARF Ltd on or about 26 June 2009. Indeed, par 71 of the Statement of Claim specifically identified the breach as Giorgi's entry into the Transfer Deed and the Side Letter and its agreement to the grant of the Option.
7. Secondly, nothing in the pleading suggested that the breach of fiduciary duty extended to anything that occurred after the agreed variations. In particular, the allegation of breach did not rely upon, or refer to, anything done by Giorgi at the time of the settlement of the 30 January 2009 contract (in September 2009).
8. In particular, there was no suggestion in the Statement of Claim that the arrangements made at the time of settlement to account for the reduction in purchase price, reflecting the net effect of the three payments referred to at [79] above, gave rise to any new or additional breach of fiduciary duty. In that regard, those arrangements were referred to in pars 54 and 55 of the Statement of Claim in the foll[79]ing terms:79
   1. In or about September 2009, [Kingslane], [Giorgi] and ARF agreed that the payment of $780,000 to be made by ARF to [Kingslane] pursuant to clause 2.1 of the Transfer Deed pleaded in paragraph 50.1 above would be satisfied by being deducted from the purchase price to be paid by [Giorgi] to ARF for the purchase of the Land at Settlement of the Contract of Sale, even though [Giorgi] was not a party to the transaction the subject of clause 2.1 of the Transfer Deed.

1. The sum of $858,000 was deducted from the purchase price paid by [Giorgi] to acquire the Land at Settlement under the Contract of Sale on 15 September 2009.
2. As is apparent, however, these pleadings simply describe the payment arrangements made at settlement. The pleadings do not suggest that those arrangements involved any breach of fiduciary duty. Indeed pars 54 and 55 of the Statement of Claim are never referred to again in the Statement of Claim.
3. As will also be apparent, the learned trial judge dealt with the breach of fiduciary duty claim in the form in which it was pleaded and presented at trial.

Pleaded case - the claim against Mr Cranston and Kingslane

1. The pleaded case against Mr Cranston (and through him Kingslane) flowed directly from the breaches of fiduciary duty pleaded in par 74 of the Statement of Claim, by reference to (relevantly) par 71 of the Statement of Claim.
2. In that regard, par 75 of the Statement of Claim pleaded:[80]
   1. As the sole director of [Giorgi] and as a director of [Kingslane], [Mr Cranston]:

75.1 procured that [Giorgi] engage in the conduct pleaded in paragraphs 71 and 72;

75.2 was knowingly concerned in a dishonest and fraudulent design of the Trustee;

75.3 has knowledge in his capacity as a director of [Kingslane] which is imputed to [Kingslane] that the benefit of the Option and the Option Deed and the benefit pleaded in paragraph 71.2 were obtained by [Kingslane] as a result of breach of the duties of [Giorgi] pleaded in paragraph 73 ...

1. The appellants' claim against Mr Cranston and Kingslane was therefore based on their alleged accessorial liability for the breaches by Giorgi pleaded in par 74 of the Statement of Claim, by reference to (relevantly) par 71 of the Statement of Claim. Absent the alleged breach of duty by Giorgi, no liability on the part of Mr Cranston and Kingslane could be established.
2. As noted at the commencement of these reasons, the appellants also pleaded that they were entitled to bring claims against Mr Cranston and Kingslane for the benefit of Giorgi as trustee for the Giorgi Trust on behalf of, and for the benefit of, all beneficiaries of the Giorgi Trust.
3. The appellants pleaded their entitlement (or standing) to do so in par 8 of the Statement of Claim:
   1. The plaintiffs bring this action insofar as it seeks relief for the benefit of [Giorgi] as Trustee of the Giorgi 2009 Trust with the Trustee as a defendant in the following special circumstances:

8.1 [Mr Cranston] is a director of [Kingslane] and the sole director of [Giorgi];

8.2 [Mr Cranston], [Kingslane] and [Giorgi] have, prior to institution of these proceedings, been represented by common lawyers to respond to the allegations pleaded herein, and continued to have such common representation until institution of this action despite the plaintiffs' demand that the Trustee be separately represented; and

8.3 by reason of the matters pleaded in paragraphs 8.1 and 8.2, the Trustee would not institute proceedings making the allegations herein against [Mr Cranston] and/or [Kingslane] and/or [Giorgi] for the purposes of the claims made in this action for the benefit of [Giorgi] as Trustee of the Giorgi 2009 Trust.

1. The respondents admitted the allegations of fact in pars 8.1, 8.2 and 8.3 of the Statement of Claim, but did not otherwise admit the paragraph.[81] The respondents therefore did not admit that there were 'special circumstances' entitling (or giving standing to) the appellants to bring the proceedings seeking relief for the benefit of Giorgi as trustee.
2. Whether there were 'special circumstances' was therefore in issue at trial. In addition, it should be noted that, other than the allegation of accessorial liability by reason of their participation in the alleged breaches by Giorgi, there was no separate or independent allegation of any legal or equitable wrong by Mr Cranston and Kingslane against Giorgi that would have given Giorgi a claim against Mr Cranston or Kingslane. That distinction is relevant to a proper understanding of the learned trial judge's reasons in relation to the appellants' alternative claim.
3. We turn now to her Honour's findings relevant to the appeal.

1. The findings of the learned trial judge relevant to the appeal may be summarised under the following broad headings:

(a) findings of fact to the effect that Mr McRobert consented to, and acquiesced in, the agreed variations;

(b) findings as to the consequences of Mr McRobert having consented to, and acquiesced in, the agreed variations; and

(c) findings as to whether the Giorgi Trust was a managed investment scheme required to be registered under the Corporations Act.

1. The learned trial judge's findings of fact in relation to whether Mr McRobert consented to, or acquiesced in, the agreed variations were primarily based on the evidence of Mr Cranston and Mr Arias, together with objective facts established by the contemporaneous documentation.
2. In that regard, her Honour made the following findings in relation to the evidence of Mr Cranston and Mr Arias:[82]

[227] I found Mr John Cranston, Mr Arias, and Mr Cuthbert generally to be credible witnesses.

[228] I found the evidence of Mr John Cranston to be reliable as his evidence is substantially in material respects corroborated by contemporaneous documents and in part uncontradicted evidence given by Mr Arias.

[229] The evidence given by Mr Arias, Mr Jarrad Cranston, and Mr Cuthbert was, in general, accepted by the plaintiffs.

[230] It is fair to say that the record keeping of relevant agreements by Mr John Cranston was generally very poor. Mr John Cranston is a business man of the ilk who prefers not to record discussions and agreements reached in business meetings and often conducts business over lunch. During the course of cross examination, Mr John Cranston said that the negotiations with ARF were fluid and it was difficult to write down specifics. He also said that it was difficult to keep track of all the paperwork.

[231] Yet, Mr John Cranston's answers to questions were generally responsive and concise. There were some matters that he could not recollect. However, he conceded if a document incorrectly recorded what had otherwise been agreed. In particular, he conceded that the information provided to NAB and to Mr Copeland (the valuer) about the terms of the variation to the lease to ARF were incorrect.

[232] Most importantly, Mr John Cranston's evidence is generally consistent with the material objective facts that can be established by the contemporaneous documentary evidence.

1. Having accepted the credibility and reliability of the evidence of Mr Cranston and Mr Arias, the learned trial judge summarised their evidence in relation to discussions with Mr McRobert about the proposed variations. That summary included the following matters:

(a) After Mr Cranston sent the email containing Mr Engelsman's proposal on 22 May 2009 (see [56] above), Mr Cranston spoke to Mr McRobert about the proposal and while he could not recall specifically what Mr McRobert said, he could recall that Mr McRobert was comfortable with continuing the negotiations with Mr Engelsman but Mr McRobert was concerned with other issues about the terms of sale, including contamination [83] the land.83

(b) After Mr Cranston forwarded the email from Mr Engelsman dated 4 June 2009 to Mr McRobert (see [59] above), which substantially reflected most of the terms of the agreed variations, Mr Cranston spoke to Mr McRobert and they laughed about Mr Engelsman referring to Kingslane as 'Lakeside' (in[84]he email).84

(c) Mr Cranston's evidence was also that he discussed the progress of negotiations with ARF Ltd with Mr McRobert after 10 June 2009 and Mr McRobert was concerned about contamination on the land. Mr Cranston's evidence was that they discussed:

(i) that any contamination on Lot 26 would not be an issue as ARF Ltd was going to be the owner after subdivision of Lot 26;

(ii) financing (and they continued to discuss this until September 2009);

(iii) the terms of the lease which had been changed from $80,000 per annum to a peppercorn lease of $1; and

(iv) the potential of having ARF Ltd as a lot beneficiary of Lot 26 and changing the rent from $80,000 per annum to a $1 peppercorn lease and, in return for that lease, ARF Ltd reducing the price of the purchase of the land by $780,000.[85]

(d) Mr Cranston was concerned about ARF Ltd's future viability, and wanted to make sure that if anything happened to ARF Ltd that the Trust or one of the beneficiaries would, at least, have the option of buying the interest in Lot 26 back from ARF Ltd for the same price that they paid. For this reason he insisted that Mr Engelsman agree to ARF Ltd granting an option to Kingslane to reacquire the beneficial interest in Lot 26 in certain circumstances.[86]

(d) Prior to putting the option proposal to Mr Engelsman, Mr Cranston spoke to Mr McRobert and said words to the effect that somebody has to take up the option and the Giorgi Trust would not have the money. Mr McRobert said to him that he was happy for him to take up the option. Mr Cranston also discussed this issue with Mr Arias who informed him that he was not interested in taking up the option.[87]

(e) Mr Arias gave uncontradicted evidence (consistent with Mr Cranston's evidence) about the discussions that Mr Cranston had with Mr McRobert in mid‑2009 in respect of the variations to the terms of the contract for the purchase of Lot 2009. In particular, Mr Arias gave uncontradicted evidence in his written witness statement (not challenged in cross‑examination) that between March and June 2009, he met regularly with Mr Cranston and Mr McRobert to discuss the purchase of the property and its development, and that during those discussions they specifically discussed:

(i) the change in the purchase price from $3.3 million to $2.5 million; and

(ii) the change from a lease with a rental of $80,000 per annum to a peppercorn lease, as a result of the reduced purchase price.[88]

1. The learned trial judge later turned to the objective facts established by contemporaneous documents, before reaching her ultimate factual findings as to Mr McRobert's consent to, and acquiescence in, the agreed variations. In that context, her Honour found:

(a) Plainly, Mr McRobert was aware that Mr Cranston was renegotiating the terms of the ARF Ltd contract with Mr Engelsman and had knowledge of the initial proposal that Mr Engelsman put to Mr Cranston on 22 May 2009 as he was sent a copy of the email containing the proposal.[89]

(b) Importantly, Mr McRobert was sent a copy of the email from Mr Engelsman to Mr Evan Cranston dated 4 June 2009. It was clear from that email that ARF Ltd's solicitor was finalising documents that proposed that:

(i) ARF Ltd would sell to Giorgi the whole of Lot 2009; and

(ii) ARF Ltd was to be nominated as the lot beneficiary for proposed Lot 26.[90]

(c) when the emails of 22 May 2009 and 4 June 2009 are read together, it was clear that what was being contemplated was:

(i) a reduction in the purchase price on a pro rata basis on the agreed price of $3.3 million (by $780,000); and

(ii) an option to Kingslane to purchase Lot 26.[91]

(d) The proposed option was the subject of legal advice provided by Philip Pullinger (Mr Pullinger), on 10 June 2009, which was forwarded by email to Mr McRobert by Mr Cranston. The legal advice provided by Mr Pullinger was provided in the context of the stamp duty that might be payable in the event that the contract to purchase Lot 2009 was cancelled or varied.[92]

(e) Mr McRobert responded in writing after reading the legal advice. It was important that, on receipt of and after reading that advice, all that warranted a comment in writing from Mr McRobert was his concern about contamination pluming beyond Lot 26 into the 'pond' (being the area he described as the area 'we are seeking to purchase'). Mr McRobert otherwise described the legal advice as 'very interesting reading'.[93]

(f) By these observations, it was clear that Mr McRobert by that point in time understood that ARF Ltd was to become the lot beneficiary of Lot 26 and the owner of proposed Lot 26 on subdivision. His understanding on this point is conveyed by his words which describe contamination within the 'lease area' as extending into 'the area that we are seeking to purchase'.[94]

(g) The fact of a proposed option to be granted by ARF Ltd to Kingslane to purchase Lot 26 was also disclosed to Mr McRobert in the draft lease, dated 19 June 2009 that was shown to Mr McRobert on or about that date.[95]

(h) Even if Mr McRobert was only shown a copy of the two pages of the draft lease, dated 19 June 2009, which contained the schedule, the schedule made it clear that:

(i) the term of the lease was for a term expiring on the earlier of 20 years from the commencement date or upon completion of the subdivision; and

(ii) the date of transfer of proposed Lot 26 was to be in accordance with the terms of the transfer deed and that the rent for the term was to be in the sum of $1 (including GST). [96]

(i) The fact that Mr McRobert knew that the terms of the contract for the purchase of Lot 2009 had been varied and what those terms were is consistent with the action Mr McRobert took following settlement of the purchase of Lot 2009 on 15 September 2009.[97]

1. In relation to Mr McRobert's evidence that he was not informed about the proposed variations, the learned trial judge also made the following credibility finding:

[368] I did not find Mr McRobert's evidence, that he and Mr John Cranston simply stopped talking about the negotiations in June 2009, to be credible or truthful given the close relationship between them. Throughout 2009 they saw each other regularly, and (subsequent to the settlement) in September 2009 Mr Cranston invested in Mr McRobert's new consultancy company MPM Developments.

1. The learned trial judge's ultimate factual findings as to Mr McRobert's consent and acquiescence were as follows:

[370] Plainly, Mr McRobert consented to and acquiesced to vary the terms of the ARF contract for the purchase of lot 2009. He was aware of and consented to the material terms of the transactions that occurred between ARF, Kingslane and Giorgi on 26 June 2009.

[371] Whilst the documents that put in place the terms of the amended agreement with ARF to purchase lot 2009 were drafted by lawyers, the material terms of the variations, being the peppercorn rent, the reduction in the purchase price, the financial contribution by ARF (by reduction of the purchase price) to enable it to become a lot beneficiary over the land upon which the biodiesel facility was built, and the option to purchase the lot from ARF following subdivision were not complicated. It was not difficult to understand what was agreed or the effect of the variations. Consequently, it cannot be said that to understand and fully consent to the agreed variations legal advice was required.

[372] In addition, there is sufficient evidence to support an inference that Mr McRobert consented to the changes to the agreement with ARF (namely the lease and Giorgi Trust). I have found that Mr McRobert had knowledge of the breach that was (given his profession, level of experience, and the nature of the variations to the agreement between Giorgi and ARF) fully informed.

1. Her Honour reiterated these findings a little later in the Primary reasons:[98]

[381] On the evidence before the court it is clear that Mr John Cranston was aware that Mr McRobert had knowledge of the change to the material variations of the contract to purchase lot 2009 including the lease agreements with ARF. Mr McRobert offered no objection and, in fact, indicated a desire to continue; he did so by continuing to participate in the development and communication with Mr John Cranston about the ongoing negotiations with ARF. In oral evidence Mr McRobert acknowledged having seen a 'radically different version of the lease' and was forwarded a copy of the legal advice received by Mr John Cranston on the subject of varying the contract to purchase lot 2009. Further, Mr Arias gave uncontradicted evidence that he and Mr McRobert met with Mr John Cranston in his office in Subiaco to discuss the agreement with ARF and that he and Mr McRobert consented to the changes to the lease, and the transfer and option deeds.

[382] Mr McRobert, at the very least, acquiesced to the alleged breach of trust. In any event, if I am wrong about the consent, the question of acquiescence in this matter arises in the nature of categories one and two identified by Deane J in Orr v Ford and, therefore, should be treated as a form of estoppel by words or conduct. If a cestui que trust concurs in this manner to a breach of trust and the trustee acts upon that implied consent the cestui que trust is estopped from proceeding against the trustee for the consequences of the breach.

Findings as to the consequences of consent and acquiescence

1. The learned trial judge's finding that Mr McRobert consented to and acquiesced in the agreed variations was relevant to the dismissal of the appellants' claims in two broad respects.
2. First, that consent and acquiescence was relevant to the appellants' claims as beneficiaries of the Giorgi Trust. In that regard the only beneficiaries of the Trust that brought claims (in that capacity) were Mr McRobert, the other appellants' associated with him and Morara Pty Ltd (Mr Weaver's entity). In that context, the learned trial judge concluded that it was only necessary for the Court to find that the beneficiaries of the Trust at the time of the variations consented to, or acquiesced in, those variations.
3. Her Honour found:[99]

[208] The court must be satisfied that at the time the agreement was entered into between ARF and Giorgi, in June 2009, to vary the terms of the contract for the purchase of lot 2009 that Mr McRobert and Mr Arias knew of and consented to the terms of the variations to the contract.

[209] For the reasons that follow, I have found that it is only necessary for the court to find that Mr McRobert and Mr Arias knew and consented to the variation of the terms of the contract as they each (together with Mr John Cranston and their respective entities) were the only beneficiaries of the Giorgi Trust Deed immediately prior to, and at the time of, execution of the side letter, the option, the transfer deed, and the lease.

1. In relation to Mr Weaver, in particular, the learned trial judge found:

[298] Nor was Mr Weaver's consent to the ARF's transactions required. On any view of the matter Mr Weaver did not become a beneficiary of the Giorgi Trust until shortly before, or sometime after, settlement of the purchase of the property on 15 September 2009, when he took a transfer of part of Mr and Mrs McRoberts' interest. As such, Mr Weaver's entity Morara was, and is, a successor in title to the McRoberts, such that if Mr and Mrs McRobert consented or acquiesced to the transaction now the subject of the complaint, Morara can be in no better position.

1. Secondly, the learned trial judge's finding that Mr McRobert consented to and acquiesced in the agreed variations was relevant to the appellants' alternative claim (against Mr Cranston and Kingslane) sought to be brought for the benefit of Giorgi as trustee for the Giorgi Trust on behalf of, and for the benefit of, all beneficiaries of the Giorgi Trust (including Mr McRobert and the other appellants associated with him).
2. In that regard, her Honour's conclusions were as follows:[100]

[425] It is not necessary, as counsel for the plaintiff claims, for the defendants to prove the consent or acquiescence of all the beneficiaries of the Giorgi Trust to be established in order for the defence to the alleged breach of trust to be made out. Equity provides personal remedies and, as I have observed, consent or acquiescence in the case of a defence against a claim by a beneficiary to a breach of trust operates to preclude the beneficiary who consented or acquiesced in the breach from later complaining of it.

[426] The joinder of the beneficiaries to the action is a course ordinarily expected to be undertaken by beneficiaries seeking redress for breach of trust. It is elementary that when one or more (but not all) cestuis que trust sue the trustee with a view to affecting the interests of the other beneficiaries, they must join as defendants not only the trustees, but also all remaining cestuis que trust.

[427] In this action, all beneficiaries of the Giorgi Trust, with the exception of ARF, are parties to the proceedings. The plaintiffs claim that the action is brought on behalf of Giorgi as trustee of the Giorgi Trust for and on behalf of the beneficiaries. As counsel for the plaintiffs points out, equity permits a beneficiary to sue in their own capacity, joining as defendants the trustee and any other beneficiaries, but only where there are 'special circumstances'. 'Special circumstances' arise where there has been a failure, excusable or inexcusable, by the trustee in the performance of the duty owed by the trustee to the beneficiary to protect the trust estate or to protect the interests of the beneficiaries in the trust estate. It is an exceptional course of action.

[428] A trustee who is in breach of trust must restore the trust estate to the same position as it would have been in had no breach been committed. A defaulting trustee must compensate the trust estate to the extent that his or her breach has caused loss or depreciation to it. Accordingly, the plaintiff seeks an order that Giorgi account to the beneficiaries for its breaches of trust; further, on behalf of Giorgi, an order that Mr John Cranston and Kingslane pay equitable compensation to Giorgi for assisting in the alleged breach; and for orders under the Corporations Act. The action that is brought is to remedy breaches of Giorgi as trustee on account of its alleged breach of trust associated with the lease to ARF of lot 26. The beneficiaries of the Giorgi Trust who have been added as defendants are parties to the proceedings by virtue of the old rule that beneficiaries must be added as defendants; they are not complaining beneficiaries and do not themselves bring an action against the trustee.

[429] The general rule is that as long as the trustee is ready and willing to take proper proceedings against the third person, the beneficiaries cannot maintain a suit against [him or her].

[430] In respect of the action to be brought on behalf of the trust against Mr John Cranston and Kingslane as third parties for compensation to be paid to the Giorgi Trust for their involvement in the breaches of trust, the action can only be brought in special circumstances. In general, the reason for this is to prevent the vexation of third parties by exposing them to multiple suits.

[431] The plaintiffs plead their special circumstances at [8] of their further re amended statement of claim. However, the plaintiffs in these proceedings, as I have observed, have consented, or acquiesced, to the breach of trust by the trustee and third parties (as have the other relevant beneficiaries - Mr John Cranston and Mr Arias). For a beneficiary to be permitted to bring an action on behalf of the trust against a third party, or parties, there must be a failure of the trustee to protect the trust estate or the beneficiaries' interest in that estate. There can, however, be no such failure in circumstances where the beneficiaries who institute the action have consented or acquiesced to the alleged breach of trust and, being a court of conscience, there are no other circumstances that would otherwise make it fair and equitable to allow the beneficiary to complain of the breach. For this reason, the plaintiffs cannot maintain an action of this nature against Mr John Cranston and Kingslane on behalf of Giorgi and for the benefit of all the beneficiaries.

Findings as to whether the Giorgi Trust was required to be registered as a managed investment scheme

1. As set out at [24] to [26] above, whether the Giorgi Trust was required to be registered turned on:

(a) whether Mr Cranston was 'in the business of promoting managed investment schemes' within the meaning of s 601ED(1)(b) of the Corporations Act; and

(b) whether all of the interests in the Trust did not require the giving of a PDS. This, in turn, depended upon whether each of the offers to join the Trust was a 'personal offer' within the meaning of s 1012E of the Corporations Act.

1. As to the first issue, the learned trial judge referred to a number of previous developments in which Mr Cranston had been involved. Her Honour's conclusions in this regard were equivocal. She said:

[459] There is, in my opinion, some evidence to conclude that Mr Cranston is in the business of promoting managed investment schemes.

[460] Whilst Mr Cranston was clearly involved in the developments identified above, there is only a small amount of evidence that goes toward establishing the claim made by the plaintiffs that Mr Cranston is, in fact, a person in the business of promoting managed investment schemes. There is no dispute between the parties that Mr Cranston acted as a promoter in respect of the Giorgi Trust.

[461] I accept Mr Arias' and Mr Cranston's evidence in respect of Mr Cranston's involvement in the Caves Road development, in which his (Mr Cranston's) involvement was in the nature of a developer and that he did not solicit others to participate in the scheme, that role was fulfilled by Mr Hughes. I also accept Mr Cranston's evidence in respect of the Hayward St development, that he was a developer but did not actively promote the development. Mr Cranston did not, in respect of the Caves Road and Hayward St developments, act as a promoter because his role was not formulating, advertising and soliciting in order to recruit participants to the scheme.

[462] With regard to the Tuart Brook development and Casuarina Road development, counsel for the plaintiffs points to evidence of Mr Cranston's participation in the schemes but does not point to any substantive evidence of Mr Cranston's role as a promoter of those schemes (as the plaintiffs allege to be the case).

[463] However, a finding on this point is not, however, determinative ...

1. In relation to the second issue, namely whether the offers to the beneficiaries of the Trust were 'personal offers', her Honour concluded that the offers made to Mr Morris, Mr Weaver, Mr Cuthbert, Ms Jackson, Mr Bandy and Mr Norton were all 'personal offers' as that term is understood in s 1012E(2) and (5) of the Corporations Act.[101]
2. In that context the learned trial judge found:

(a) the offers made to Messrs Morris, Weaver, Cuthbert, Bandy and Norton, and Ms Jackson, were offers that were only capable of acceptance by the person to whom the offer was made;[102] and

(b) in each case the offers were made personally and orally, and were only made to persons who were known to, or introduced to Mr Cranston for the purpose of discussing investment in the Giorgi Road development. Each of the persons identified was afforded the opportunity to invest in the Giorgi Road development after meetings with Mr Cranston or as a result of their personal relationship with him and/or Mr McRobert, and there is no evidence to otherwise suggest that any offers of a general nature were made to persons who were not personally connected to Mr Cranston in some way or introduced to him through Mr McRobert or Mr Mason (the real estate agent).[103]

[501] Mr John Cranston's evidence was that Mr Morris was introduced to him by Mr McRobert because Mr Morris was interested in investing in the Giorgi Road development. According to Mr John Cranston, Mr Morris declared an interest in investing in the development. In mid August 2009, Mr John Cranston and Mr Morris met to discuss the development and subsequently, in late 2009, Mr Morris became a capital beneficiary.

[502] Mr Morris is now deceased, but prior to his death he was a business partner of Mr McRobert. The offer that was made to Mr Morris was made orally and by virtue of the fact that Mr Morris was introduced to Mr John Cranston personally, by Mr McRobert, for the purpose of his investment in the Giorgi Road development. Mr Morris attended a meeting with Mr John Cranston where the two of them discussed the Giorgi Trust; the offer to invest that was made to Mr Morris was only open for him to accept. Further, on the basis that the offer was made subsequent to Mr Morris expressing an interest in investing in the development, or a development of its kind, I am satisfied that the offer made to Mr Morris was a personal offer.

1. In relation to Mr Weaver, her Honour found:[104]

[503] Mr Weaver became aware of the Giorgi Road development in mid to late 2009. It is Mr Weaver's evidence that Mr John Cranston advised him to invest in the development because of its potential return. Mr John Cranston and Mr Weaver had known each other for some time, having met in the 1990s. In or about March 2009, Mr Weaver took office space in Mr John Cranston's offices in Subiaco where Kingslane was based. At that time Mr Weaver was engaged in a separate investment known as the Fargo Way Property Syndicate. Mr Weaver took an assignment of the interest acquired by Mr and Mrs McRobert after the Giorgi Trust Deed was executed. This was a personal arrangement entered into between Mr McRobert and Mr Weaver, the outcome of which was Mr Weaver's $100,000 interest in the Giorgi Trust (for which Mr McRobert received an interest in the Fargo Way Property Syndicate organised by Mr Weaver).

[504] The arrangement between Mr John Cranston, Mr Weaver, and Mr McRobert arose out of the personal relationship and history between them. The offer to Mr Weaver was a personal offer only open to be accepted by him. It was an offer tailored to his personal needs and the personal needs of Mr McRobert, who wanted (at that time) to reduce his investment in the Giorgi Trust. The offer made to Mr Weaver was one only open to be accepted by him, and on the basis of their pre existing professional and personal relationship. As such, I am satisfied that the offer to Mr Weaver was a personal offer as defined under s 1012E(5).

1. In relation to Ms Jackson, her Honour found:[105]

[505] In 2009, Mr John Cranston and Ms Jackson had known each other for five years. They were business partners and each held a 50% share in a company called Depwest Ltd. Ms Jackson approached Mr John Cranston about the prospect of investing in the Giorgi Road development in 2009. Mr John Cranston's evidence was that Ms Jackson approached him in 2009 and requested to invest in the Giorgi Road development. The offer that was then made to Ms Jackson was one which met the definition of 'personal offer' on the basis that they had a pre existing relationship and Ms Jackson approached Mr John Cranston.

1. In relation to Mr Bandy and Mr Norton, her Honour found:[106]

[506] Mr McRobert did not know Mr Bandy but knew of him before the Giorgi Road development; he did know Mr Norton (albeit, according to him, not well). Mr Bandy and Mr Norton are licensed financial planners who conduct a financial planning business in Bunbury. Mr John Cranston's evidence was that Messrs Bandy and Norton may have been introduced to him by Mr McRobert and Mr Mason. In or about August or September 2009, Mr John Cranston was informed of Messrs Bandy and Norton's desire to invest $100,000 in the Giorgi Road development. It was Mr John Cranston's recollection that it may have been (although, he was not sure) Mr McRobert who told him. Mr John Cranston confirmed that intention with both Mr Bandy and Mr Norton. On the basis that both Mr Bandy and Mr Norton expressed an interest in investing in the development and were introduced to Mr John Cranston for that purpose, I am satisfied that the offer made to them was only capable of acceptance by them and (given their express interest in investing in the Giorgi Road development) was a personal offer.

1. In relation to Mr Cuthbert, her Honour found:[107]

[507] Mr John Cranston and Mr Cuthbert have known each other for a long time. Mr Cuthbert's evidence was that he has known Mr John Cranston for 20 years, that they were good friends, and that Mr John Cranston's building company was involved in the construction of Mr Cuthbert's home. Mr Cuthbert's evidence was that he had a number of personal conversations with Mr John Cranston about the Giorgi Road development. At the time he spoke to Mr John Cranston about the Giorgi Road development, Mr Cuthbert had some funds to invest and he asked Mr John Cranston about the prospect of investing in the Giorgi Road development; Mr John Cranston then invited him to do so. Given the history of investment and friendship between Mr John Cranston and Mr Cuthbert, and the nature of the offer (given in response to a specific request by Mr Cuthbert) I am satisfied that the offer made to Mr Cuthbert was a personal offer.

1. Having found that all of the offers were personal offers, the learned trial judge found that the Giorgi Trust was not a managed investment scheme that was required to be registered. The jurisdiction of the Court to wind up a managed investment scheme under s 601EE of the Corporations Act was, therefore, not enlivened.[108]
2. We turn now to the grounds of appeal.

Grounds of appeal Grounds of appeal - preliminary remarks

1. By way of broad summary, the appellants contend that the learned trial judge:

(a) erred in holding that the appellants could not bring an action against Mr Cranston and Kingslane on behalf of the Giorgi Trust and for the benefit of all the beneficiaries (ground 1);

(b) erred in holding that the Giorgi Trust was constituted by a trust deed (ground 3.1);

(c) erred in finding, in relation to the defence of acquiescence and consent, that it was only necessary to find that the beneficiaries of the Giorgi Trust immediately prior to, and at the time of, the agreed variations knew of, and consented to, those variations (grounds 2 and 3.2);

(d) erred in finding that Mr McRobert gave informed consent to, and acquiesced in, Giorgi's breach of fiduciary duty (ground 4);

(e) erred in finding that Mr Cranston was generally a credible witness (ground 5);

(f) erred in accepting Mr Cranston's evidence concerning his promotion of managed investment schemes and in not holding that Mr Cranston was in the business of promoting such schemes (ground 6); and

(g) erred in holding that the offers made to retail investors and potential retail investors in the Giorgi Trust were 'personal offers' within the meaning of s 1012E(5) of the Corporations Act and that the Trust should not be wound up under s 601EE of the Corporations Act (ground 7).

1. While this brief summary of the grounds of appeal is incomplete and runs the risk of oversimplification, in this case a heavy dose of simplification was called for. The grounds of appeal (which are reproduced in the Schedule to these reasons) are, for the most part, frankly impenetrable.
2. Take, for example, ground 3. It commences (in ground 3.1) by pleading that the learned trial judge erred in fact and in law in holding that the Giorgi Trust was constituted by a trust deed (i.e. the Trust Deed). That allegation is wholly inconsistent with the entire basis of the appellants' claim at trial. The appellants expressly pleaded and the respondents admitted, that they and the other beneficiaries are 'the Beneficiaries of the [Giorgi Trust], of which [Giorgi] is the Trustee, and which was established in writing and constituted by the Giorgi Trust Deed dated 29 January 2009'.[109]
3. On appeal, the appellants, in a complete volte‑face, contended that the Trust Deed was void.[110] That was a peculiar position to adopt, given the centrality of the obligations in the Trust Deed to the appellants' case at trial. In order to meet the adverse implications potentially arising from this point not having been run at trial (namely, that the Trust Deed was void), the appellants relied upon another point not made at trial (namely, that the Trust Deed was an admission against interest by Giorgi).[111] At the hearing of the appeal, counsel for the appellants was asked how this new formulation of their case made any difference to the findings made by the learned trial judge as to the fiduciary duty claim.[112] No satisfactory answer to that question ever emerged.
4. Ground 3, however, goes further. Without any clear connection to ground 3.1, ground 3.2 proceeds to challenge the learned trial judge's finding as to the beneficiaries necessary to consent to the breach of fiduciary duty. The ground runs to almost four pages, consisting of eight sub-sub-paragraphs (one of which contains sub-sub-sub-sub-sub-paragraphs).[113] It is labyrinthine in its complexity.
5. Then, as the submissions were developed at the hearing of the appeal, the appellants submitted that ground 3.2, albeit not in 'specific terms', challenged findings made by the learned trial judge that were not referred to in the grounds of appeal at all (such as a finding that the Transfer Deed and lease did not contravene s 136(1) of the Planning and Development Act 2005 (WA)).[114] The Court was, apparently, asked to infer that such a challenge was 'just part of the overall breach that is relied upon'.[115]
6. The appellants went so far, at the hearing of the appeal, to propose that the failure of the grounds to identify the challenged findings was due to the 'difficulty' that this Court 'works on a system of absolute limit of 20 pages for submissions'.[116]
7. What was lacking in the appellants' case in this appeal was not the opportunity to include even more written material. What was lacking was precision and focus as to the real issues in the appeal and the basis upon which it was said that the learned trial judge had erred. Grounds of appeal such as those in the present case obscure, rather than reveal, the real issues in the litigation. The failure of parties to adhere to the requirements of the rules of this Court,[117] to state grounds precisely and succinctly, is inimical to the due administration of justice and must cease. In this instance the appellants' failure to comply with the rules was conspicuous and cannot pass without adverse comment. The additional public resources required to sift and identify the true issues in an appeal such as this delays the proper resolution of the appeal and adversely affects every other appeal in the Court waiting to be heard or determined.
8. One respect in which the grounds in the present case did comply with the Court of Appeal Rules was that they identified the paragraph numbers of the Primary reasons where it was said that the learned trial judge was in error.[118] For the purposes of the appeal, we propose to deal with each ground of appeal by reference to those paragraphs of the Primary reasons said to be in error, discerning the challenge to those paragraphs as best we can from the grounds and submissions. If a paragraph of the Primary reasons is not expressly challenged in a ground of appeal, however, we have treated it as unchallenged, notwithstanding that it might be referred to in the penumbra of the written submissions or in passing in the appellants' oral address.
9. In addressing the grounds of appeal, we propose to deal, first, with ground 3, as (upon close inspection) it seeks to run an entirely new case not run at trial.
10. We will then deal with the grounds of appeal that, prima facie at least, engage with the conclusions of the learned trial judge. In that regard, we will deal with the grounds of appeal under the same broad headings under which we have set out her Honour's findings above, namely:

(a) grounds that challenge the finding that Mr McRobert consented to, and acquiesced in, the agreed variations (grounds 4 and 5);

(b) grounds that challenge the findings as to the consequences of Mr McRobert having consented to, and acquiesced in, the agreed variations (grounds 1 and 2);

(c) grounds that challenge the findings as to whether the Giorgi Trust was required to be registered under the Corporations Act (grounds 6 and 7).

1. As we have already observed, ground 3.1, by contending that the learned trial judge erred in fact and in law in holding that the Giorgi Trust was constituted by a trust deed, is wholly inconsistent with the entire basis of the appellants' claim at trial. In addition, as we have said, no satisfactory explanation as to how the new formulation of their case made any difference to the findings made by the learned trial judge as to the fiduciary duty claim ever emerged in the appeal.
2. In those circumstances, in our view, it is not in the interests of justice to allow the appellants to run that new case on appeal. The principles in relation to the advancing of a new case on appeal are well‑established. Exceptional circumstances are required, even if no question of further evidence arises. The due administration of justice requires that the substantial issues between the parties are ordinarily settled at the trial and that there is finality to litigation.[119]
3. Moreover, it is apparent (once its elaborate and convoluted web is untangled) that ground 3.2 also seeks to run a case not run at trial.
4. At first glance, ground 3.2 appears to allege the same error as that alleged in ground 2, namely that the learned trial judge erred in holding that it was only necessary to find that the beneficiaries of the Giorgi Trust immediately prior to, and at the time of, the agreed variations knew of, and consented to, those variations. Indeed, grounds 2 and 3.2 expressly challenge the same paragraphs of the Primary reasons (namely, Primary reasons [208] to [209]).[120]
5. In that regard, ground 2 (which we have dealt with below) contends that, unless Giorgi pleaded and proved consent or acquiescence on the part of persons who were not beneficiaries at the time of the relevant breach (i.e. on or about 26 June 2009) and who only became beneficiaries after that time, Giorgi could not rely upon the consent of the persons who were beneficiaries at the time of the breach in defence of claims by those beneficiaries.
6. On close inspection, however, this is not the contention made by ground 3.2; or, at least, the contention made by ground 3.2 when it is understood in the context of what follows in grounds 3.2.3 to 3.2.8 to provide content to the chapeau in grounds 3.2.1 to 3.2.2.
7. On the contrary, what ground 3.2 seeks to do is to raise an entirely different breach of fiduciary duty, namely one that is alleged to have occurred in September 2009, after the agreed variations. The appellants do this by contending (in ground 3.2.5) that in September 2009 there was a further variation to the 30 January 2009 contract (which they define as the Pre-Settlement Transaction), which they then plead (in ground 3.2.8) as the Settlement Breach.[121] The Pre-Settlement Transaction and the Settlement Breach are alleged to have arisen from the arrangements made at the time of settlement to account for the reduction in purchase price, referred to at [79] above (see grounds 3.2.5 and 3.2.6).
8. Therefore, so the argument runs, it was necessary for the respondents to prove the consent or acquiescence of the beneficiaries at the time of settlement. The essence of ground 3.2 is set out in the appellants' submissions in the following terms:[122]

The transactions completed at Settlement were, as detailed in ground 3.2, materially modified between execution of the Transfer Deed, Side Letter, Lease and Option in June 2009 and Settlement taking place in September 2009. The Respondents conceded that, unless the pleaded defences of informed consent and acquiescence were established, the transactions undertaken at Settlement were a breach of Trust (Settlement Breach): Reasons at [207] and [373]. (emphasis added)

1. This submission reveals the fundamental flaw in ground 3.2.
2. First, there was no 'Settlement Breach' pleaded by the appellants at trial, in the sense of a breach of fiduciary duty alleged as a result of modifications occurring 'between execution of the Transfer Deed, Side Letter, Lease and Option in June 2009 and Settlement taking place in September 2009'. The breach of fiduciary duty, the subject of the appellants' case at trial, was the breach pleaded at par 71 of the Statement of Claim (see [81] to [89] above). That breach was the execution of the Transfer Deed, Side Letter, Lease and Option in June 2009, not something that occurred between that date and settlement.
3. Secondly, there being no pleaded 'Settlement Breach', it is incorrect to say that the respondents conceded that they needed to establish consent to the 'Settlement Breach'. The respondents conceded the breach pleaded at par 71 of the Statement of Claim. And it was that breach in relation to which they pleaded and proved Mr McRobert's consent and acquiescence.
4. The appellants' departure from the pleaded case in relation to the breach of fiduciary duty the subject of the case at trial is made unambiguously clear in ground 4.1 (which incorporates, by reference, ground 3.2). Ground 4.1 contends that

because the Judge erred in not holding that the Pre Settlement Transaction modified the Transfer Deed, Side Letter and Lease as detailed in ground 3.2 above, the Judge erred in fact and law in holding at [363] that the material variations of the Contract of Sale at the time of Settlement were limited to variations put into effect by entry into the Side Letter, Transfer Deed and Option Deed. (emphasis added)

1. It will be apparent that the contention that the learned trial judge erred in holding that 'the material variations of the Contract of Sale ... were limited to variations put into effect by entry into the Side Letter, Transfer Deed and Option Deed' directly contradicts the appellants' case at trial.
2. As set out at [81] and [86] above, it was the appellants' pleaded case that Giorgi's breach of fiduciary duty was 'by reason of' it entering into the Side Letter and Transfer Deed and by agreeing to the granting of the Option. By ground 4.1, therefore, the appellants contend that the learned trial judge erred by holding that Giorgi breached its fiduciary duty in precisely the terms that the appellants pleaded and contended at trial.
3. The appellants should not, in our view, be permitted to run this new case on appeal. The appellants made no real attempt to bring themselves within the exceptional category of cases in which a party may advance a new case on appeal. Indeed, the grounds of appeal do not reveal that that is in fact what the appellants were endeavouring to do. It was only at the hearing of the appeal that the appellants, somewhat blithely, accepted that the Settlement Breach was not pleaded.[123]
4. It is not in the interests of justice to allow the appellants to reconstruct its case on breach. In particular, it is not the case, as the appellants submitted, that the 'facts are admitted' or that there is 'no dispute about it'.[124]
5. The so‑called 'Settlement Breach' sought to be raised on appeal related to the arrangements made at the time of settlement whereby Giorgi paid ARF Ltd $780,000 (plus GST) less than the purchase price, in lieu of Kingslane paying that amount to Giorgi, Giorgi then paying it to ARF Ltd and then ARF Ltd paying it to Kingslane.
6. Mr Cranston was asked about those arrangements in the course of cross‑examination, which he described as a 'journal entry'[125] or 'accounting entry', [126] that was left 'with the accountants'.[127] It was not put to Mr Cranston in cross‑examination that those arrangements constituted some fresh breach of duty on the part of Giorgi. Indeed, when objection was taken to the questions in relation to the effects of the arrangements, counsel for the appellants identified their relevance as going to Mr Cranston's 'understanding' of the transactions that were in breach of trust (i.e. the agreed variations).[128]
7. There were no admitted facts in relation to a Pre‑Settlement Transaction or, more importantly, a Settlement Breach. There was no application made to amend the pleadings to introduce allegations to that effect. There is no basis upon which the appellants should be permitted to run that case now.
8. In any event, as the learned trial judge found, the reduction in the purchase price in lieu of the other payments referred to at [79] above was entirely consistent with the agreed variations. Her [129]our said:129

The option to purchase was to be purchased by ARF for the value of $780,000 (plus GST) which was the value of Kingslane's required initial lot contribution which, at that point in time, it had not yet paid. The decision to reduce the purchase price by $780,000 reduced the purchase price by what would otherwise have been Kingslane's initial lot contribution and corresponds to ARF's payment for lot 26. The granting of the option to Kingslane, for the price of $780,000 indexed (not including GST), was reflective of the fact that Kingslane had been the lot beneficiary under the Giorgi Trust Deed (as I have found, of which Mr McRobert was aware and to which he agreed) and was to have the option to purchase lot 26 exercisable during any of the periods listed above ...

1. In oral submissions, counsel for the appellants accepted that what happened in September 2009 was a 'tweaking arrangement'.[130]
2. The learned trial judge was not in error in her understanding of the effect of the agreed variations and there is no basis to conclude that her Honour was in error in not holding that there had been a separate breach of fiduciary duty following the agreed variations.
3. No error on the part of the learned trial judge has been demonstrated. Ground 3 (and with it ground 4.1) must fail.
4. Of course, as the above passage acknowledges, Giorgi's agreement (in the Transfer Deed) to the granting of the Option to Kingslane formed part of the breach of fiduciary duty for which Mr McRobert's consent or acquiescence was required. The learned trial judge's conclusion that Mr McRobert had so consented and acquiesced is the subject of grounds 4 and 5, to which we now turn.

Grounds 4 and 5 - challenges to the findings of consent and acquiescence

1. Grounds 4 and 5, together, challenge the learned trial judge's finding that Mr McRobert consented to and acquiesced in the agreed variations. In reaching that ultimate conclusion, her Honour:

(a) accepted, as credible and reliable, the evidence of Mr Cranston (and Mr Arias) that Mr McRobert had been kept apprised of the negotiations with ARF Ltd after 10 June 2009; and

(b) concluded that the extent of the information provided to Mr McRobert was sufficient to understand the nature of the proposed variations, so as to enable him to give informed consent to the agreed variations.

1. The first of these matters (Mr Cranston's credibility) is the subject of ground 5 and the second matter (Mr McRobert's informed consent to the agreed variations) is the subject of ground 4 (save for ground 4.3, which incorporates, by reference, ground 5).
2. It is appropriate to consider the grounds in that order.

1. Ground 5 challenges the learned trial judge's assessment of Mr Cranston as a credible witness.
2. On a first reading, ground 5 appears to engage the principles of appellate restraint in relation to factual findings affected by a trial judge's assessment of the credibility and reliability of the witnesses at trial. Those principles were restated by the High Court in Lee v Lee in the following terms:[131]

A court of appeal is bound to conduct a 'real review' of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint with respect to interference with a trial judge's findings unless they are 'glaringly improbable' or 'contrary to compelling inferences' is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts. Thereafter, 'in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge'. (footnotes omitted)

1. In this context, however, ground 5 has some unusual features.
2. First, despite running for more than two pages, the ground does not actually challenge any specific finding of fact made by the learned trial judge said to be based on Mr Cranston's evidence. Rather, it challenges the antecedent finding that Mr Cranston was generally a 'credible witness'. While ground 4.3 relies upon ground 5, in alleging that her Honour 'erred in relying on the evidence of Mr John Cranston in reaching the conclusions of informed consent and acquiescence', it similarly does not identify any particular finding of fact that is said to be challenged.[132]
3. A finding that a witness is 'generally credible', without more, is of no practical significance unless that finding contributes in some way to a primary finding of fact that is in issue in the trial. Findings as to witnesses' credibility and reliability are only made so that the trier of fact can make findings as to the facts in issue in the proceeding. They are not ends in and of themselves.
4. Similarly, a ground of appeal that seeks to challenge a finding that a witness is 'generally credible' is, without more, of no consequence unless there is an identified challenge to an actual finding of fact that was in issue in the trial.
5. In this respect, ground 5 (read with ground 4.3) wholly misses the mark. It does not, for example, challenge any particular finding to the effect that Mr Cranston informed Mr McRobert of some fact, matter, or thing - as might be the case if it had challenged the finding that Mr Cranston and Mr McRobert continued to communicate about the negotiations with ARF Ltd after 10 June 2009.[133]
6. Secondly, insofar as the grounds challenge the ultimate finding that Mr McRobert consented to, and acquiesced in, the agreed variations (at Primary reasons [370]), the grounds do not engage with how the challenge to Mr Cranston's credibility, in turn, affects that ultimate finding of fact. This is significant, given that the learned trial judge, in making the ultimate finding, referred to a large body of evidence that did not emanate from Mr Cranston,[134] including Mr McRobert's own evidence that he had seen a copy of the draft lease containing the $1 rent prior to the agreed variations.[135] The grounds of appeal make no reference whatsoever to that evidence.
7. For this reason, even if ground 5 was established, and the learned trial judge's finding that Mr Cranston was a credible witness set aside, that conclusion would not, without addressing the other evidence relied upon by her Honour, have the result that the finding that Mr McRobert consented to, and acquiesced in, the agreed variations should also be set aside. More would be required.
8. The appellants' submissions in support of grounds 4.3 and 5 are equally unhelpful as to which actual findings of fact would be affected by the challenge to Mr Cranston's credibility. The submissions simply assert that 'if and to the extent any of these elements were established by the evidence of Mr John Cranston, the evidence should have been rejected for the reasons in ground 5'.[136] The Court is, apparently, left to determine for itself, and without assistance, 'whether and to what extent' this was indeed the case.
9. Thirdly, it is apparent from the terms of ground 5 that it also misapprehends the effect of the principles of appellate restraint referred to at [163] above in other respects. One of those principles is that an appeal court should not interfere with findings likely to have been affected by a trial judge's advantage in having seen and heard the witnesses unless those findings are demonstrated to be wrong by 'incontrovertible facts or uncontested testimony', or they are 'glaringly improbable' or 'contrary to compelling inferences'.
10. In ground 5 the appellants, apparently by reference to this principle, seek to engage the notion of 'glaring improbability'.[137] The ground does not do so by reference to findings of fact that are said to be 'glaringly improbable'. It does not, for example, allege that the ultimate finding that Mr McRobert consented to, and acquiesced in, the agreed variations was 'glaringly improbable' or that the primary finding that Mr Cranston and Mr McRobert continued to communicate about the negotiations with ARF Ltd after 10 June 2009 was 'glaringly improbable'. Of course, had the ground done so, it would have been obvious that those findings were not glaringly improbable.
11. Rather, ground 5 contends that parts of Mr Cranston's evidence, being parts of his evidence that were not the subject of findings, were 'glaringly improbable'. Those contentions were therefore not directed to establishing that some finding of fact made by the learned trial judge was 'glaringly improbable' but, rather, that there were other findings that her Honour could have made in relation to collateral issues that should have caused her to reject Mr Cranston's credibility generally.
12. For the above reasons, in our view, ground 5, insofar as it attempts to challenge the ultimate finding that Mr McRobert consented to, and acquiesced in, the agreed variations, is ill‑conceived and fails to grapple with the findings of fact actually made by her Honour.
13. Nevertheless, given the significance of the learned trial judge's finding as to Mr Cranston's credibility to the issues in the trial generally, we will deal with ground 5 on its own terms. The gravamen of the ground is that the learned trial judge should have rejected Mr Cranston's evidence as not being credible by reason of the four matters 'particularised' in grounds 5.1 to 5.5. Each of those matters related to Mr Cranston's dealings with the NAB.
14. Before turning to those matters, it is appropriate to recognise that the learned trial judge's finding that Mr Cranston was generally a credible witness was clearly based, in part, upon her Honour's advantage at having seen and heard the witnesses. Her Honour observed that Mr Cranston's answers were 'generally responsive and concise' and recognised that he made appropriate concessions.[138] Her Honour's acceptance of the reliability of Mr Cranston's evidence, however, was not limited to that advantage, but also drew on the consistency of his evidence with the documentary record and with the evidence of Mr Arias.[139]
15. The burden of ground 5 is, therefore, not merely whether the matters relied upon by the appellants could or should have adversely affected Mr Cranston's credibility, but that they were of such significance as to displace her Honour's favourable assessment of his credibility. It is truly a case in which it is necessary for the appellants to demonstrate that her Honour 'failed to use, or has palpably misused, ... her advantage as trial judge'.[140]
16. Turning then to the matters raised by the appellants.
17. The first matter (referred to in ground 5.1 and 5.2), concerns the fact that, in his dealings with NAB, Mr Cranston provided the bank with an unexecuted copy of the Trust Deed, at a time when it had been executed. That this occurred is evident from an email from Mr Dunn, the senior partner from NAB with whom Mr Cranston was dealing.[141] It should be noted, however, that there was no evidence (and no finding) as to when Mr Cranston provided the unexecuted copy, nor was that copy adduced in evidence.[142]
18. Mr Cranston was asked about having provided the unexecuted copy of the Trust Deed in cross‑examination:[143]

So did you submit to National Australia Bank, who I will refer to as NAB, an unexecuted copy of the trust deed for the Giorgi 2009 Trust to review? Did you do that?---Yes.

And you did that even though the trust deed had been signed by parties before you submitted it to the NAB?---We are only looking at hypothetical borrowings at that stage. We weren't doing anything firm and we hadn't agreed on that with the three partners.

No. Just answer the question, please, Mr Cranston.

Although the trust deed had been executed, at the time you submitted it you submitted an unexecuted draft copy?---Correct.

Why did you do that?---We hadn't entered into anything with the NAB at that stage.

But why did you submit an unexecuted draft copy of the deed when the deed had already been executed?---We didn't need to be sending signed deeds to - out into the public.

It's a confidential communication to a banker. You understand that, don't you?---It wasn't necessary to send the executed deed to get the answer that we needed.

1. In the course of her recitation of the background facts, the learned trial judge said:[144]

For some reason (that is not made clear in the evidence) a copy of a draft trust deed was sent to NAB.

1. Ground 5.1 alleges that the learned trial judge erred in 'holding' that the reason for sending an unexecuted draft was not made clear in the evidence, because Mr Cranston had, in the passage referred to above, proffered an explanation (apparently, according to the appellants' contention, making the reason 'clear').
2. We would hesitate to elevate her Honour's passing reference (in parenthesis) to the reason for the draft trust deed being sent to NAB as a 'holding' or a finding. The passing reference was just that, a passing reference to one of the threads of the narrative not being 'clear'. In any event, there is nothing inaccurate about the passing reference. Mr Cranston clearly accepted that he had sent an unexecuted copy of the deed (consistent with her Honour's acceptance of his candour as a witness) and he proffered an explanation for doing so. That explanation was, in essence, that at that stage of the dealings with NAB, 'we didn't need to be sending signed deeds ... out into the public'. One might infer from that exchange that Mr Cranston did not entirely trust the bank to keep the Trust Deed confidential. Nevertheless, as her Honour observed, that inference is not 'clear' from the evidence itself. Nor, with respect to the cross‑examiner, were any questions asked to make it clear.
3. Ground 5.2 then goes on to contend that Mr Cranston's evidence in this regard was 'glaringly improbable' because there was 'no plausible reason for Mr John Cranston to not send a copy of the executed deed to NAB'. Ironically, having criticised the learned trial judge for not describing Mr Cranston's reason for providing NAB a draft of the deed as 'clear', the appellants contend that her Honour ought to have found it 'glaringly improbable'.
4. It is, of course, neither. If, as we have posited above, Mr Cranston's reason for not sending an executed copy of the Trust Deed to NAB was that he did not entirely trust the bank to keep it confidential, it is hardly 'glaringly improbable' that Mr Cranston might adopt that position.
5. Ground 5.3.1 complains that the learned trial judge erred in not holding that Mr Cranston was dishonest because he was satisfied with an email dated 2 June 2009 from his son, Mr Evan Cranston, to Mr Engelsman that said:[145]

1. Unexecuted copy of the trust deed as approved by the NAB ...
2. This was said to be dishonest because it was 'false' to say that NAB had approved the Trust Deed.
3. Mr Cranston gave evidence in relation to the email and his antecedent conversation with Mr Engelsman:[146]

And you told Mr Engelsman that the unexecuted copy had been approved by the NAB, did you?---Yes.

And it hadn't, had it?---In relation to discussions with Mr Engelsman, it was an approved NAB trust that had been previously used by Devwest, so I was aware that it fitted the NAB criteria.

That's what you told Mr Engelsman, is it?---Yes.

1. Mr Cranston's evidence was therefore that he had communicated to Mr Engelsman that the form of the Trust Deed fitted NAB's criteria (and in that sense was 'approved').
2. While there might be room for debate as to the precise denotation of the word 'approved' in this context, Mr Cranston's view that the unexecuted Trust Deed was in a form acceptable to NAB was not unreasonable. In that regard, Mr Dunn's email to Mr Cranston of 14 May 2009 (referred to at [180] a[147]e) reads:147

Hi John

See attached

Not much to amend.

A couple of things to consider:

• There would be a preference to remove any reference to development as part of the trust - i.e. land acquisition only
• Perhaps prepare a Deed of Variation to accommodate any development at a later date
• I will need a fully executed copy before I can proceed

1. No 'dishonesty' is evident from Mr Cranston's evidence in this regard and certainly nothing sufficient to displace the learned trial judge's otherwise favourable impression of his credibility.
2. Similarly, there is no merit in the appellants' contention (in ground 5.3.2) that Mr Cranston's evidence to the effect that (as at 2 June 2009) a change to the Trust Deed was being contemplated in the negotiations between him and Mr Engelsman was 'glaringly improbable'. It is clear from the contemporaneous documentation (including the 2 June 2009 email referred to at [187] above) that there were a variety of potential outcomes that might be reached in the negotiations (some of which would have involved a change to the Trust Deed and some of which would not).
3. The final matter about which the appellants complain concerning Mr Cranston's credibility is the contention that Mr Cranston 'falsely represented or caused to be represented' to a valuer (Mr Copeland) and NAB that, under the amended lease, in the event that the subdivision was not finalised within 24 months, the rent would revert to $80,000 per annum (ground 5.4).
4. This contention relates to a draft email to Mr Copeland prepared by Mr Arias on 23 July 2009. That email was addressed by the learned trial judge as follows:[148]

[132] ... The draft email prepared by Mr Arias was sent to Mr John Cranston on 23 July 2009 for Mr John Cranston to check for accuracy. In the email, Mr Arias stated:

Had the discussion with Michael, seemed ok, but would not make any commitment on Value. He understood what we were doing and didn't seem to have any problems. Before I send can you have a look at the words below for accuracy and whether there is anything you want to include.

As discussed today the terms of the proposed sale have changed as follows;

1. ARF are now purchasing 26,000 m2 @ $30/m2, payment at settlement of the Englobo parcel.
2. ARF will lease the 26,000m2 @ $1/yr.
3. Lease to be a maximum of 24 months in the event the subdivision is not finalised by that period then the original lease terms apply, that is lease of $80,000 per annual for 20 years.

Could you review the valuation based on these changed circumstances. Would you please advise of your requirements and timing to undertake this review. As this is now affecting settlement your urgent attention would be appreciated.

[133] When Mr John Cranston and Mr Arias were cross‑examined they each conceded that the third point in the draft of the email to be sent to Mr Copeland was incorrect. Mr John Cranston's evidence is that he spoke to Mr Arias shortly after he received the email and told him that this was not correct.

[134] Mr Arias' evidence was that he had not seen a copy of the lease when he drafted the email and that he had included point three following (an earlier discussion with Mr John Cranston). He however could not recall whether he spoke to Mr John Cranston after he sent the draft to him or whether indeed the email was sent (to Mr Copeland).

[135] It appears, however, that the information stated in the draft email was provided to Mr Copeland.

[136] This erroneous information was also repeated to NAB.

1. There is nothing in ground 5.4, in relation to Mr Cranston's credibility, that was overlooked by the learned trial judge or which her Honour failed to address. Indeed, it is clear from the learned trial judge's credibility findings themselves, that her Honour regarded Mr Cranston's concession that the information provided to NAB and Mr Copeland was incorrect as being a matter that bolstered, rather than detracted from, his credibility.[149]
2. The learned trial judge, having seen and heard Mr Cranston give that evidence, was entitled to accept it as truthful. The appellants' tendentious submission that the evidence 'showed [Mr Cranston] to be dishonest' simply gainsays her Honour's direct finding to the contrary. It reveals no error.
3. For the above reasons, in our view, none of the matters relied upon by the appellants, either alone or in combination, establish that the learned trial judge erred in concluding that Mr Cranston was generally a 'credible witness'.
4. Having addressed each of the matters raised by the appellants in ground 5 it may also be observed, returning to the preliminary observations we made above, that none of the matters raised by the appellants to impugn Mr Cranston's credibility relate, even remotely, to the factual finding that Mr McRobert consented to, and acquiesced in, the agreed variations. All of those matters related to external financing, rather than the nature of the variations agreed between Mr Cranston and ARF Ltd on 26 June 2009.
5. Ground 5 must fail.

Ground 4 - whether Mr McRobert gave informed consent

1. Ground 4 is divided into three sub‑grounds.
2. As we have observed at [146] above, ground 4.1 incorporates by reference ground 3.2 and the notion of the 'Settlement Breach'. It must fail for the reasons we have given in relation to ground 3.
3. Ground 4.2 also refers to the 'Settlement Breach'. To that extent it must likewise fail.
4. Nevertheless, it is possible to discern in ground 4.2 a challenge to the findings that Mr McRobert gave informed consent to the agreed variations, reflected in the Side Letter, the Transfer Deed and the Option Deed. Ground 4.2 refers to the agreed variations as the Variation Transactions.
5. In that regard, the gravamen of ground 4.2 appears to be that the learned trial judge erred in holding that:

(a) the agreed variations were not complicated or difficult to understand; and

(b) it was not necessary for Mr McRobert to have been provided with copies of the Side Letter, Transfer Deed and Option Deed or to obtain legal advice about the proposed variations in order to understand what was proposed.

1. Her Honour certainly made findings to this effect, which appear in Primary reasons [371] (see [105] above). It should be observed, however, that those findings must be understood in their broader context.
2. In that regard, what is required for fully informed consent is:[150]

a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given.

1. In that context the sufficiency of disclosure can also depend upon the sophistication and intelligence of the persons to whom disclosure must be made.[151]
2. In the present case, the learned trial judge's finding that Mr McRobert consented to the agreed variations included her Honour's acceptance of Mr Cranston's and Mr Arias's evidence that they had specific discussions with Mr McRobert about each aspect of the agreed variations. We have already rejected the appellants' challenge to the learned trial judge's finding that Mr Cranston was generally a credible witness and the appellants did not challenge the evidence of Mr Arias relied upon by her Honour.[152]
3. The learned trial judge also had the advantage of seeing and hearing Mr McRobert's own evidence. In that context her Honour found that Mr McRobert read all of the documents and emails sent to him by Mr Cranston and, importantly, did not say that he did not understand them. Her Honour held that it was inherently improbable that Mr McRobert would have invested in the development of Lot 2009 unless he had discussed with Mr Cranston and ascertained through those discussions what was the outcome of the negotiations with Mr Engelsman.[153]
4. In their proper context, these findings must be understood as reliant on her Honour's assessment of Mr McRobert's level of sophistication and experience. In the very next passage of the Primary reasons, the learned trial judge referred to a number of property developments in which Mr McRobert had invested (while rejecting his own attempt to downplay his knowledge of such investments). Her Honour also found that Mr McRobert was an experienced planner who was well aware of what is involved in the subdivision of land that requires the change of use of land by implementing amendments to planning schemes.[154]
5. In making her ultimate finding as to Mr McRobert having been fully informed, the learned trial judge therefore took into account Mr McRobert's profession (town planning consultant) and his level of experience.[155] The appellants did not challenge her Honour's findings as to Mr McRoberts level of experience. Nor did they challenge the learned trial judge's rejection of Mr McRobert's own evidence as to whether he was aware of the agreed variations.
6. The learned trial judge therefore found, as a fact, that Mr McRobert was subjectively aware of all of the material terms of the agreed variations.
7. The point of ground 4.2, as explained in oral submissions,[156] was in essence that a person of Mr McRobert's profession and level of experience would not be capable of understanding the agreed variations, in a manner sufficient to give informed consent, in the absence of:

(a) knowledge that Kingslane was entering into a transaction in which, without having paid its Initial Lot Contribution, it would sell its beneficial interest in Lot 26 for which it would receive $780,000 for itself and an option to acquire the land in the future;

(b) copies of the Side Letter, Transfer Deed and Option Deed; and

(c) legal advice as to the effect of those documents.

1. Whether fully informed consent requires the provision of independent legal advice is, as with the issue of fully informed consent generally, a question of fact.
2. The appellants did not, in their submissions, identify any particular aspect of the agreed variations that required legal advice for a person in Mr McRobert's position to be able to understand them.
3. Rather, the appellants presented their case on appeal in terms that the transactions reflected in the agreed variations were, as counsel put it, 'extremely hard to understand'. Indeed counsel submitted that the fact that (on the appellants' case) the learned trial judge 'seriously misunderstood' the nature of the agreed variations, demonstrated their complexity and the need for Mr McRobert to be provided with independent advice.[157]
4. We disagree. The agreed variations were not difficult to understand. Nor did the learned trial judge misunderstand them.
5. The essential features of the agreed variations (as summarised by the learned trial judge)[158] were as follows:

(a) following the sale of Lot 2009 to Giorgi, ARF Ltd (the vendor under the contract for that sale) would retain the beneficial interest in Lot 26 (the land upon which its biodiesel plant was constructed);

(b) Kingslane had been the original 'lot beneficiary' of Lot 26;

(c) the 'price' for ARF Ltd becoming the lot beneficiary of Lot 26 was $780,000 (plus GST), which was the same amount payable by Kingslane as lot beneficiary in respect of Lot 26;

(d) ARF Ltd would pay for the interest in Lot 26 by a reduction in the purchase price at sale of $780,000 (plus GST);

(e) as it would now be the 'lot beneficiary' for Lot 26 (in exchange for the reduction in the purchase price), ARF Ltd would pay a nominal rent for the lease of Lot 26 pending subdivision, rather than the initial $80,000 per annum; and

(f) when the subdivision was completed, Kingslane would have the option of purchasing Lot 26 from ARF Ltd for the sum of $780,000 (plus GST), indexed to increases in CPI.

1. The first three 'elements' of these arrangements were not difficult to understand. In practical terms, Giorgi would pay ARF Ltd $780,000 (plus GST) less than the original purchase price for Lot 2009, because ARF Ltd would be retaining a beneficial interest in and the use of Lot 26. The economic impact of that change to Giorgi was neutral, as it was not required to pay ARF Ltd $780,000 (plus GST) that it would otherwise have received from Kingslane. It may also be observed that the economic impact on Kingslane may also be described as neutral, as it did not have to make the initial $780,000 (plus GST) lot contribution for Lot 26 but also did not become the lot beneficiary for that lot.
2. The fourth 'element' was also easily understood. ARF Ltd would now be, in effect, leasing land in relation to which it had the beneficial interest and for which it had 'paid' $780,000 (plus GST). For that reason, it would no longer be required to pay a substantial rent. That change did have an adverse economic impact on Giorgi, in that the substantial rent was forgone. There were, however, certain beneficial consequences that flowed from the new lease arrangements, including the lessee's indemnification of Giorgi in relation to any contamination on Lot 2009 and the reduction in the purchase price (and any borrowings required to finance the purchase price).
3. The fifth element, the grant of the option to Kingslane, was also easily understood. Kingslane, who had forgone its interest as the lot beneficiary of Lot 26 could, in effect, reacquire that interest from ARF Ltd in the future, for the same initial price, indexed to CPI increases.
4. The way in which these agreed variations were structured, by the Side Letter, Transfer Deed and Option Deed, appears to have been a consequence of the legal advice received by Giorgi in relation to the stamp duty implications of cancelling the original contract with ARF Ltd and entering into a new contract and the need to protect the investors from any consequence of there being contamination on Lot 2009. Those were the two matters dealt with in the legal advice from Mr Pullinger dated 10 June 2009 (see [103 (d) and (e)] above). That meant that some aspects of the agreed variations (such as the reduction in the purchase price) were achieved by indirect means (including the round robin of payments referred to at [79] above). Nothing in the documents, however, contradicted the overall substantive effect of the agreed variations summarised above.
5. In support of its submission that fully informed consent required that Mr McRobert be provided independent legal advice, the appellants referred to Commonwealth Bank of Australia v Smith[159] and Maguire. In each of those cases the Court concluded that independent advice was required for fully informed consent. The appellants submitted that the present case required such a finding 'more clearly than ... Macguire or Smith'.[160]
6. Neither decision supports the appellants' submission. They are a far cry from the circumstances of the present case.
7. Smith was concerned with a breach of fiduciary duty by an investment adviser (a bank and its branch manager) to its customer (the respondents) in relation to the value and viability of an investment in a hotel business. The advice was wrong. The vendor of the hotel business was also a customer of the bank, thereby giving rise to an actual conflict of the bank's duties. The branch manager of the bank, who provided the investment advice, not only failed to advise the respondents to seek independent advice. On the contrary, he persuaded the respondents not to do so and encouraged them not to see either an accountant or a hotel broker.[161] Given the conflict in the bank's duty to both of the customers, it is clear that the respondents required independent advice in relation to the very matters about which the bank was advising them.
8. Macguire was concerned with a breach of fiduciary duty by two solicitors (the solicitors) acting for clients in relation to the purchase of a business including securing a loan for bridging finance for the purchase. The clients executed a mortgage in favour of the solicitors in relation to another property, establishing a direct relationship of debtor and creditor between the solicitors and the client. The trial judge found that no information was provided to the clients as to who the mortgagees were (or why) and was not persuaded that they read or understood the significance of the solicitors' names appearing on the mortgage. Again, the need for independent advice in that case was, with respect, obvious.
9. In the present case, by contrast, the admitted breach of fiduciary duty arose out of the renegotiation by Giorgi of the terms of the purchase from ARF Ltd. The need to renegotiate the terms of the purchase arose because, amongst other things, ARF Ltd had indicated that it would have difficulty in paying the agreed rent.[162] If the terms could not be renegotiated there was a prospect that the proposed development could not proceed. It was in that context that Mr Cranston proposed renegotiating the contract as potentially it could result in the purchase of Lot 2009 on more favourable terms.[163]
10. Accordingly, while agreeing to the variations did result in a breach of fiduciary duty (by foregoing the $80,000 per annum rent and agreeing to the grant of the option), the agreed variations were nevertheless part of a package of measures intended to produce countervailing benefits for the proposed development of Lot 2009.
11. In that context, what was most significant for the consent of the beneficiaries of the Trust (whose consent to the agreed variations was necessary) was the economic effect of those variations. In that regard, the economic effect was, as the learned trial judge found, fully understood by Mr McRobert. Unlike in Smith and Macguire, independent advice was not necessary for Mr McRobert to understand and appreciate the renegotiated transaction. Nor were copies of the Side Letter, Transfer Deed and Option Deed required for that purpose.
12. Ground 4.2 therefore fails.
13. Ground 4.3, which is dependent upon the success of ground 5, must also fail.
14. The learned trial judge has not been shown to be in error in finding that Mr McRobert consented to, and acquiesced in, the agreed variations.
15. Ground 4 must fail.

Grounds 1 and 2 - challenges to the findings as to the consequences of consent and acquiescence

1. Grounds 1 and 2 challenge the learned trial judge's findings as to the consequences of Mr McRobert's consent to, and acquiescence in, the agreed variations.
2. In that regard:

(a) ground 2 relates to the appellants' primary claim, as beneficiaries of the Giorgi Trust, and contends that her Honour erred in finding that it was only necessary to find that the beneficiaries of the Giorgi Trust immediately prior to, and at the time of, the agreed variations knew of, and consented to, those variations; and

(b) ground 1 relates to the appellants' alternative claim that they brought the proceedings against Mr Cranston and Kingslane for the benefit of Giorgi as trustee for the Giorgi Trust on behalf of, and for the benefit of, all beneficiaries of the Giorgi Trust. Ground 1 contends that the learned trial judge erred in not finding that there were special circumstances entitling the appellants to bring that claim.

Ground 2 - beneficiaries required to give consent to breach of trust

1. The only beneficiaries of the Giorgi Trust who brought proceedings against Giorgi for breach of trust, on their own behalves, were the entities associated with Mr McRobert and Mr Weaver. Mr Weaver's company, Morara Pty Ltd, did not become a beneficiary until after the events giving rise to the breach and, being a successor in title to Mr McRobert's entities, could be in no better position than those entities.[164]
2. In addition, there is no dispute that, at the time of the agreed variations in June 2009, the only beneficiaries of the Giorgi Trust were the entities associated with Mr Cranston, Mr Arias and Mr McRobert. It was, for that reason, that her Honour concluded that it was only necessary to find that Mr Cranston, Mr Arias and Mr McRobert (and their respective entities) knew of and consented to the agreed variations.[165]
3. At trial, the learned trial judge rejected the appellants' contention that it was necessary for the respondents to prove the consent or acquiescence of all the beneficiaries of the Giorgi Trust (including those that became beneficiaries after the breach) in order for the defence to the alleged breach of trust to be made out.[166]
4. On appeal, the appellants have not identified any reason, in principle, why that should be the case nor any authority in support of the contention that a beneficiary that has consented to a breach of trust (and so is estopped from complaining of that breach) can nevertheless bring a claim against the trustee on the basis that a person who was not a beneficiary at the time did not so consent.
5. The entirety of the appellants' written submissions in relation to ground 2 were as follows:[167]
   1. All beneficiaries must be made defendants where a plaintiff sues to recover trust property for the benefit of all beneficiaries because, without joinder, orders affecting the interests of the beneficiaries cannot be made. Further, joinder of all beneficiaries in those circumstances is mandatory, because, unless a person is joined, they are not bound by the outcome of a case.
   2. One effect of joinder of a beneficiary as a defendant because they are a necessary party is that the Court must determine that beneficiary's rights; and if one beneficiary is precluded from complaining about a breach of trust because of consent or acquiescence, only that beneficiary is precluded and other beneficiaries' rights to complain are unaffected.
   3. Accordingly, the Judge erred in not holding that the proceedings should not be dismissed on the grounds of consent or acquiescence to the pleaded breach of trust unless a defence of consent or acquiescence had been pleaded and proved against all beneficiaries (which was not done).
   4. Informed consent is a defence; not an exception to be negatived by a plaintiff.
6. While each of the propositions in pars 4 and 5 of these submissions is no doubt correct (as abstract statements of law), they are not relevant to (and do not support) the proposition that, in defending a claim for breach of trust by one beneficiary on the grounds of consent or acquiescence it is necessary to plead and prove consent or acquiescence against all beneficiaries (even less, persons who were not beneficiaries at the time of the breach). Indeed, the final limb of par 5 suggests to the contrary. The proposition in that sentence, namely that the defence applies only to a beneficiary who so consents, confirms the personal nature of the action for breach of trust. That is, the effect of consent is personal to the particular beneficiary who has given the consent.
7. Paragraph 6 is a non‑sequitur. It does not follow from the submissions which precede it (notwithstanding the use of the word 'accordingly'). Nor is any authority cited for the proposition in par 6.
8. In ground 2, itself, the appellants contend that the proposition is supported by 'the authorities referred to in the last sentence of [377] of the Reasons.' Those authorities are Cotton v Dempster,[168] Swan v Perpetual Executors and Trustees Association of Australia Ltd[169] and Spellson v George. [170]
9. None of those authorities support the proposition for which the appellants contend in ground 2. They simply confirm, in a variety of formulations:[171]

The old rule, which is still in existence, is that if a cestui que trust concur [sic] in a breach of trust he is forever estopped from proceeding against the trustee for the consequences of the breach. Such an estoppel can only affect the cestui que trust's own interest in the trust fund, and it can only debar him from proceeding in relation to the actual breach of trust in which he has concurred.

1. It is clear that her Honour was satisfied that the appellants were estopped from pursuing a claim in equity for the breach of trust, to which all beneficiaries in existence at the time consented and for which Morara Pty Ltd was a successor in title. That finding was sufficient to defeat the appellants' primary claim in equity.
2. Ground 2 must fail.

Ground 1 - the claim for the benefit of Giorgi as trustee

1. Ground 1 challenges the learned trial judge's conclusion that the appellants were not entitled to maintain an action against Mr Cranston and Kingslane on behalf of Giorgi.
2. In doing so, the learned trial judge, in terms, applied the statement of principle from the decision of the Privy Counsel in Hayim v Citibank NA[172] that:

These authorities demonstrate that a beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate.

[t]here can, however, be no such failure in circumstances where the beneficiaries who institute the action have consented or acquiesced to the alleged breach of trust and, being a court of conscience, there are no other circumstances that would otherwise make it fair and equitable to allow the beneficiary to complain of the breach.

1. The appellants' written submissions in support of ground 1 were, again, brief, and may be set out in full:[174]
   1. The admitted facts pleaded in paragraphs 8.1, 8.2 and 8.3 of the statement of claim dated 22 June 2018 (SOC) entitled the appellants to prosecute the proceedings for the benefit of themselves and all other beneficiaries of the Giorgi 2009 Trust (Trust) against the first respondent (Mr John Cranston), the second respondent (Kingslane) and the third respondent (Giorgi) in its own right to recover Trust property because Giorgi in its capacity as trustee of the Trust (Trustee) was not ready and willing to bring the proceedings, naming the other beneficiaries of the Trust as defendants.
   2. The learned primary Judge (Judge) erred at [431] of [2019] WASC 376 (Reasons) by misapplying the principles stated at [426] to [430] in concluding that, because the Judge held that defences of consent and acquiescence were made out, the appellants were not entitled to bring the proceedings. The conclusion at [431] is contrary to principle: although issues concerning standing are separate from merits of a matter and may be decided prior to the merits, there is no authority, and no logical reason, for retrospectively disentitling standing because of failure on the merits. The analogous principle that federal jurisdiction is not lost because the claim which attracted federal jurisdiction fails should be applied.
   3. Alternatively, the ruling at [431] of the Reasons should be set aside if the findings consent and acquiescence are reversed.
2. As we have already rejected the appellants' challenge to the findings of consent and acquiescence, the submission at par 3 above falls away.
3. Otherwise, the appellants' essential contention in ground 1 is that the admitted facts in pars 8.1, 8.2 and 8.3 of the Statement of Claim ipso facto without more entitled the appellants to bring the proceedings on behalf of Giorgi. That is, the submission appears to be that the mere fact that the trustee was not 'ready and willing' to bring certain proceedings will always amount to 'special circumstances' entitling a beneficiary to commence those proceedings against a third party.
4. That is not how we understand the authorities. While it is certainly the case that the beneficiaries cannot maintain a suit where a trustee is ready and willing to take proper proceedings,[175] the converse is not necessarily the case. The fact that a trustee declines to commence proceedings does not (for that reason alone) necessarily entitle a beneficiary to commence proceedings. 'Special circumstances' must still be shown. As Colvin J recently expressed the principle in Frigger v Kitay:[176]

As was noted by Perram J in Mercedes Holdings Pty Limited v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450 at [105], '[i]t has long been recognised that where a trustee refuses to institute proceedings relating to trust property the beneficiaries may, in certain circumstances, commence such a proceeding themselves'. However, there must be special circumstances.

1. Of course, the fact that a trustee has refused to institute proceedings may in many cases give rise to special circumstances - and perhaps will ordinarily do so. That will be because the trustee, by not bringing proceedings, will often be failing in its duty to protect trust assets.
2. Nevertheless, that is not always the case. It may be that the trustee's refusal to bring proceedings does not amount to special circumstances, because properly understood the trustee is not failing in its duty to protect the trust assets.
3. That was the learned trial judge's conclusion in the present case. The only claim in relation to which the appellants sought to bring proceedings against Mr Cranston and Kingslane, for the benefit of Giorgi, was a claim for accessorial liability in relation to a breach by Giorgi, in circumstances in which, as the learned trial judge found, the breach by Giorgi was excused by the beneficiaries' consent. Indeed, in the case of consent (as opposed to acquiescence) it can properly be said that the breach 'does not arise'.[177] The existence of informed consent goes to negate what would otherwise be a breach of fiduciary duty.[178] Either way, at the time of the agreed variations, there was no beneficiary that did not consent to the variations and so no basis upon which it could be said that Giorgi, by not bringing proceedings, failed in its duty to protect trust assets.
4. In our view, the learned trial judge was correct to so conclude. It could not, in our view, be the case that where a beneficiary is unable to bring a claim for breach of trust because of his or her own consent, there might nevertheless be special circumstances entitling the beneficiary to bring a related claim (relying on the same primary breach) by way of a derivative action. So far as the beneficiary is estopped from pursuing the primary claim of breach of fiduciary duty in its own right it cannot, by a sidewind, pursue an associated accessorial liability claim for the benefit of the beneficiaries generally - all the more so as such a claim is necessarily for the benefit of the beneficiary as one of the beneficiaries.
5. The position might be different if there were beneficiaries adversely affected by the alleged breach that had not consented to, or acquiesced in, the breach. In such a case a beneficiary might well have standing to bring a claim in relation to the breach, although a question would still arise as to whether a consenting beneficiary would be an appropriate representative plaintiff to pursue the trustee's rights. In the present case, however, on the findings of the learned trial judge all of the beneficiaries who had an interest in the trust property at the time of the agreed variations consented to the variations. Indeed, the effect of the variations in this case was to change the very nature of the trust property, so that the interests of all subsequent beneficiaries were referable to that, varied, trust property.
6. Similarly, the position might be different if there was some claim that Giorgi could have brought against Mr Cranston and Kingslane other than the claim based on the breach to which all of the beneficiaries gave their consent. There was, however, no such claim pleaded.
7. In this context, we would observe that it is not the case, as the appellants submitted, that the appellants were 'retrospectively [disentitled to] standing because of failure on the merits'.[179] On the contrary, it is a case in which the existence of the appellants' standing (which arose only as an alternative claim) was a matter that depended upon 'weighty and complex' questions of fact and law that could only be determined when dealing with the entire matter.[180] The conclusion that all of the beneficiaries who had an interest in the trust property at the time of the agreed variations consented to those variations simply revealed the fact that the appellants never had a proper basis to bring a claim for the benefit of the trustee.
8. Ground 1 must fail.

Grounds 6 and 7 - challenges to the findings as to whether the Giorgi Trust was required to be registered under the Corporations Act

1. The final grounds of the appeal concern the appellants' claim that Giorgi was operating an unregistered managed investment scheme in contravention of s 601ED(5) of the Corporations Act. In that regard:

(a) ground 6 alleges that the learned trial judge erred in accepting Mr Cranston's evidence concerning his promotion of managed investment schemes and in not holding that Mr Cranston was in the business of promoting such schemes; and

(b) ground 7 alleges that her Honour erred in holding that the offers made to retail investors and potential retail investors in the Giorgi Trust were 'personal offers' within the meaning of s 1012E(5) of the Corporations Act.

1. Ground 7 also alleges that her Honour erred in holding that the Trust should not be wound up under s 601EE of the Corporations Act. This latter conclusion, however, was entirely based upon her Honour's conclusion that there was no contravention of s 601ED. Unless the challenges alleged in the preceding paragraph are successful, the jurisdiction in s 601EE could not be enlivened.
2. Whether Mr Cranston was in the business of promoting managed investment schemes was relevant to whether the Giorgi Trust was required to be registered under s 601ED(1) of the Corporations Act. In the absence of a finding that Mr Cranston was in the business of promoting such schemes, s 601ED could have no application.
3. As set out at [114] above, however, the learned trial judge did not reach a concluded view in relation to that issue. That was because her Honour concluded that the Giorgi Trust was exempt from registration on other grounds, namely that there was no obligation on Giorgi to give a Product Disclosure Statement to any of the persons who invested in the Giorgi Trust (as they were each 'personal offers' within the meaning of s 1012E of the Corporations Act).
4. This latter conclusion is, of course, the conclusion challenged by ground 7. Accordingly, ground 6 does not arise unless ground 7 is made out.
5. It is therefore appropriate to address ground 7 before ground 6.

1. Ground 7 depends upon the appellants establishing that the learned trial judge erred in concluding each of the offers to invest in the Giorgi Trust was a 'personal offer' within the meaning of s 1012E of the Corporations Act.[181]
2. The definition of 'personal offer' has two essential components:

(a) that the offer may only be accepted by the person to whom it is made (s 1012E(5)(a)); and

(b) that the offer is made to a person who is likely to be interested in the offer (s 1012E(5)(b)).

1. The second component is to be determined having regard to the matters referred to in s 1012E(5)(b)(i), (ii) or (iii). The matters referred to in s 1012E(5)(b)(i), (ii) and (iii) do not give rise to separate and distinct 'elements' of the definition but are rather circumstances in which the conclusion can be reached that a person was likely to be interested in an offer.
2. Each of the components in s 1012E(5)(a) and (b) involves a question of fact.
3. Ground 7.1 challenges the learned trial judge's finding of fact that each of the offers dealt with at Primary reasons [496] to [507] were personal offers. The findings referred to in ground 7.1 relate to Mr Morris, Mr Weaver, Mr Cuthbert, Ms Jackson, Mr Bandy and Mr Norton.[182]
4. Notwithstanding that ground 7.1 appears to challenge a number of findings of fact, the appellants' submissions provide no assistance in identifying how any of the factual findings made by her Honour were in error. The appellants' written submissions simply say:[183]

[T]here was no evidence any of them indicated to Mr John Cranston interest in receiving offers of the kind made. The correct inference was that an offer was made by Mr John Cranston to anyone who might be interested in the particular project, not that it was in response to interest generally in offers of the type made.

1. The appellants' Schedule filed in accordance with PD 7.4 of the Consolidated Practice Directions did not provide much assistance either.[184] That Schedule only identified evidence in support of the learned trial judge's findings (being the witness statement of Mr Cranston and the trust deed of an earlier development in which a number of the investors in the Giorgi Trust also invested). It identified no evidence against the findings, contrary to the requirements of par 2(a)(iii) of PD 7.4.
2. In the circumstances, ground 7.1 must be understood as not challenging the primary findings of fact at Primary reasons [496] to [507] but challenging the conclusion, based on those findings, that the offers satisfied the two components in s 1012E(5)(a) and (b). In that regard the submission referred to at [275] above appears to contend that it is necessary, in order to fall within s 1012E(5)(b), that the persons to whom offers were made 'indicated to Mr John Cranston interest in receiving offers of the kind made'.
3. That is simply not what s 1012E(5)(b) requires. Section 1012E(5)(b) requires that the offer 'is made to a person who is likely to be interested in the offer'. One of the ways in which that conclusion may be reached is having regard to the circumstance that the person has indicated that they are interested in offers of that kind (s 1012E(5)(b)(iii)). But as s 1012E(5)(b)(i) and s 1012E(5)(b)(ii) make clear, it is not the only way in which that conclusion may be reached. The court may also conclude that a person was likely to be interested in an offer having regard to previous contact between the person making the offer and the person receiving the offer or some professional or other connection between those persons.
4. In relation to the findings challenged by ground 7.1, the learned trial judge found:

(a) in relation to Mr Morris, that 'the offer was made subsequent to Mr Morris expressing an interest in investing in the development, or a development of its kind';[185]

(b) in relation to Mr Weaver, that the offer was made 'on the basis of [the] pre‑existing professional and personal relationship' between Mr Cranston and Mr Weaver;[186]

(c) in relation to Ms Jackson, the offer was made 'on the basis that they had a pre‑existing relationship and Ms Jackson approached Mr John Cranston' about the prospect of investing in the project;[187]

(d) in relation to Mr Bandy and Mr Norton, the offer was made on the basis that they both 'expressed an interest in investing in the development and were introduced to Mr John Cranston for that purpose';[188] and

(e) in relation to Mr Cuthbert, the offer was made 'in response to a specific request by Mr Cuthbert' in the context of a 'history of investment and friendship between Mr John Cranston and Mr Cuthbert.'[189]

1. Each of these findings was sufficient to support the learned trial judge's conclusion that each was a 'personal offer'.
2. At the hearing of the appeal, the appellant made specific reference to Mr Chaffey and whether the offer for him to invest in the Giorgi Trust was a 'personal offer'. (It will be recalled that, ultimately, Mr Chaffey withdrew from the development - see [48] above.) The appellants submitted that Mr Chaffey's investment was not analysed in that part of the Primary reasons dealing with the other investors. They therefore submitted that 'it can't possibly have been established that the exemption in 601ED([190]applied'.190
3. That submission cannot be related to ground 7.1 of the grounds of appeal. Ground 7.1 is specifically directed to the findings at Primary reasons [496] to [507] and 'the offers there referred'. The offer to Mr Chaffey was not 'there referred'.
4. Ground 7.2, nevertheless, does challenge Primary reasons [508], in which the learned trial judge concluded, in general terms that

[a]ll the offers to invest in the Giorgi Trust managed investment scheme that were retail offers were offers made to friends or persons known to either Mr John Cranston or Mr McRobert who expressed an interest in the development and were invited to participate with offers that were only capable of acceptance by them.

1. On its face, this finding applies to all retail offers in the Giorgi Trust (including to Mr Chaffey). Nevertheless, it is the case that her Honour did not, in terms, address the issue as to whether the investment made by Mr Chaffey was a 'personal offer' within the meaning of s 1012E of the Corporations Act.
2. Whether that was a result of an oversight on the part of the learned trial judge or that her Honour intended to incorporate her earlier findings in relation to Mr Chaffey is not clear. In that regard, the learned trial judge made a number of findings in relation to Mr Chaffey's proposed investment in the Trust.[191] Whether it was an oversight, however, does not matter. The absence of a specific finding in relation to Mr Chaffey could not, in the circumstances, materially affect her Honour's overall conclusion that all of the offers to retail investors were personal offers.
3. Even if it were an oversight, it is clear based on the findings made by her Honour that the offer to Mr Chaffey to invest in the Giorgi Trust was a 'personal offer' within the meaning of s 1012E of the Corporations Act. Mr Chaffey was a friend of Mr McRobert and Mr McRobert told him that there was an opportunity to invest in the development of Lot 2009.[192]
4. Mr McRobert's evidence, upon which the learned trial judge made her findings in this regard, was as follows:[193]

Now, you say that in January 2009 Mr Cranston asked you if you knew of any other people who might be investing in a duology road development. Do you recall that conversation---I remember the conversation. Yes.

And you told him that a friend of yours, Mr Chaffey, might be interested---Yes.

Why did you think that---I knew Mr Chaffey had - or was in the process - or had sold his business and was looking at investment opportunities. He had asked me to keep an eye out for anything that may come up that he might be interested in.

And did you speak to Mr Chaffey about the Giorgi Road development---I did. I'm pretty certain.

You told him about the opportunity to invest, did you---I think so.

And you spoke to Mr Chaffey about getting him to meet John Cranston to talk about investing in the development, didn't you---Yes.

And you sent an email to Mr Cranston that he meet with Mr Chaffey---Yes.

And the purpose of Mr Cranston meeting Mr Chaffey was for Mr Cranston to talk to him about investing in the development---Yes.

And that took place at your instigation---Yes.

1. As is apparent, it was Mr McRobert's own evidence that Mr Chaffey 'was looking at investment opportunities' and had asked Mr McRobert 'to keep an eye out for anything that may come up that he might be interested in'. In addition Mr McRobert and Mr Chaffey clearly had a prior connection. The only inference properly available from the evidence, consistent with the learned trial judge's findings as to the offers to investors generally, is that the offer was made to Mr Chaffey because he was a person likely to be interested in it, having regard to his prior relationship with Mr McRobert and his indication of his interest in offers of that kind.
2. The learned trial judge's conclusion that the Giorgi Trust was exempt from registration by reason of s 601ED(2) of the Corporations Act has not been shown to be in error. Insofar as her Honour may have overlooked specifically addressing the 'personal offer' made to Mr Chaffey, that oversight could not possibly have affected that conclusion.
3. Ground 7 must fail.

Ground 6 - was Mr Cranston in the business of promoting managed investment schemes?

1. As was the case at trial, the conclusion that the Giorgi Trust was exempt from registration by reason of s 601ED(2) of the Corporations Act means that it is not necessary to determine whether Mr Cranston was in the business of promoting managed investment schemes within the meaning of s 601ED(1)(b).
2. As the appellants have not established any error in terms of ground 7, it is not necessary to decide ground 6.

1. The appellants have not established any error on the part of the learned trial judge.
2. The appeal must be dismissed.

1. The learned primary Judge (Judge) erred in law in holding at [425] to [ 431] of the reasons being [2019] WASC 376 (Reasons) that the appellants were not entitled to bring proceedings for the benefit of the third respondent (Giorgi) in its capacity as trustee of the Giorgi 2009 Trust (Trust) in that:

1.1. because the facts pleaded in paragraphs 8.1, 8.2 and 8.3 of the statement of claim (SOC) were admitted in paragraph 8 of the defence (Defence) of the first, second, third and fourth‑named fourth respondents (Respondents), special circumstances to entitle the bringing of such proceedings were established; and

1.2. if (as the Judge held at [370] of the Reasons, but is challenged in this appeal) the appellants are properly held after trial to have consented to and acquiesced in conduct giving rise to the claims made in the SOC for equitable relief, that does not (as the Judge held at [431] of the Reasons) retrospectively remove the appellants' entitlement to bring the proceedings for the benefit of the Trustee in the special circumstances pleaded in paragraph 8 of the SOC;

1.3. alternatively to grounds 1.1 and 1.2, because consent and acquiescence defences were erroneously upheld, the standing issue was also erroneously decided.

1. The Judge erred in law in holding at [208] to [209] and [425] of the Reasons that consent of beneficiaries at the time agreements to vary the Contract of Sale (as defined in paragraph 29 of the SOC) (Contract of Sale) were made in June 2009 was all that was required to establish the defences of consent and acquiescence referred to in [373] to [383] of the Reasons. The Judge should have applied the authorities referred to in the last sentence of [377] of the Reasons by holding that, because the interests of all beneficiaries of the Trust were to be determined by the court, defences of consent and acquiescence to the pleaded claims of breach of trust could not result in the proceedings being dismissed unless those defences had been pleaded against all beneficiaries of the Trust (and such defences were not pleaded) and proved by the Respondents. Accordingly, the Judge should have held that defences of consent and acquiescence failed.

3. Further or alternatively to ground 2, the Judge erred:

3.1. in fact and law in holding at [291] ‑ [293] of the Reasons that the Trust was constituted by a trust deed; and

3.2. in fact and law in holding at [208] to [209] of the Reasons that consent to vary the Contract of Sale (being express consent or implied consent, defined in the Reasons as acquiescence at [370] and [373]) only needed to be established:

3.2.1. by the Respondents as at June 2009 (when agreements to vary the Contract of Sale were entered into); and

3.2.2. by the beneficiaries of the Trust as at June 2009 (and that consent of the different beneficiaries of the Trust at the time of settlement of the transfer of Lot 2009 in September 2009 (Settlement) was not required),

3.2.3. as set out in [126] of the Reasons, by clause 2.1 of the Transfer Deed executed on 25 June 2009 ([119] of the Reasons), the second respondent (Kingslane) agreed to transfer its beneficial interest as a Lot Beneficiary in proposed Lot 26 (the land on which Australian Renewable Fuels Ltd (ARF) conducted a bio‑diesel facility) to ARF for $780,000 plus GST payable on Settlement;

3.2.4. because the amount of $780,000 was payable by Kingslane as an Initial Lot Contribution for Lot 26 on execution by Kingslane of the document styled Trust Deed (under clause 4.4.2 set out in [189] of the Reasons) and because recital C of the Transfer Deed recorded that Kingslane was a Lot Beneficiary in relation to Lot 26, the obvious inference was that ARF agreed in clause 2.1 of the Transfer Deed to pay $780,000 to acquire Kingslane's beneficial interest in Lot 26 on the basis that Kingslane had, when the Transfer Deed was executed on 25 June 2009, already paid the $780,000 Initial Lot Contribution as required by clause 4.4.2 of the document styled Trust Deed (Trust Instrument), when in fact (as held at [392] of the Reasons) Kingslane had not, when the Transfer Deed was executed, paid and never thereafter paid the Initial Lot Contribution; and the Judge erred in fact in not drawing that inference. The Judge further erred in fact and law at [384] and [386] in proceeding on the basis that there was an admission that Kingslane had an interest capable of transfer, when that was not in issue;

3.2.5. in or about September 2009 and prior to Settlement, ARF, Giorgi and Kingslane further modified the Contract of Sale by agreeing to treat the combined effect of the Contract of Sale, the Transfer Deed, the Side Letter and the Lease (material terms of the Lease being at [125] of the Reasons) as being that, at Settlement, there was a simultaneous sale back to ARF by Giorgi of beneficial ownership of Lot 26 for the sum of $780,000 plus GST (a total of $858,000) (the Pre‑Settlement Transaction). The Pre‑Settlement Transaction and the relevant tax invoice and settlement statement giving effect to the Pre‑Settlement Transaction are referred to at [129], [162] and [163] of the Reasons. The making (and timing) of the Pre‑Settlement Transaction are pleaded in paragraphs 54 and 55 of the SOC, which were both admitted in paragraphs 54 and 55 of the Defence. Because there was no contention that the tax invoice was a sham or otherwise without legal effect, the Judge erred in law in holding at [408] of the Reasons that 'the invoice does not properly describe the effect of the terms of the transfer deed. The invoice has no legal effect', and should have held that the tax invoice was evidence of (and established) the Pre‑Settlement Transaction by which the Contract of Sale was further varied before Settlement;

(a) a transaction different from the Pre‑Settlement Transaction was agreed 'before the various deeds were entered into' - i.e. before 25 June 2009 - when the admitted date of the transaction pleaded in paragraph 54 of the SOC prior to Settlement was in or about September 2009; and

(b) the Pre‑Settlement Transaction incorporated the elements set out in [395](a), (b) and (c) of the Reasons even though:

(i) as detailed in ground 3.2.4, the correct inference was that the agreement by ARF to pay $780,000 to Kingslane in clause 2.1 of the Transfer Deed was made in June 2009 on the basis that the $780,000 Initial Lot Contribution had already been paid by Kingslane (as required by clause 4.4.2 of the Trust Instrument); and

(A) that ARF was told at any time before Settlement that the $780,000 Initial Lot Contribution had not been paid by Kingslane; or

(B) that Giorgi, Kingslane and ARF agreed that the consideration for the buy‑back by ARF of the beneficial ownership of Lot 26 being paid by ARF to Giorgi by allowing a deduction at Settlement of $780,000 plus GST (a total of $858,000) from the price payable by Giorgi to ARF for the purchase of (the entire) Lot 2009 was to also be deemed payment to the Trust by Kingslane of the unpaid Initial Lot Contribution of $780,000, despite the allowed deduction from the purchase price not being paid to or otherwise received by Giorgi at Settlement or at any other time;

3.2.7. the Judge erred in not holding that the terms of the Trust Instrument obliged the Trustee to complete the Contract of Sale and in holding:

(a) at [191] of the Reasons that the Terms of the Contract of Sale are not expressly prescribed or otherwise referred to in the Trust Deed, when the Trust Instrument included definitions of 'the Contract' and 'Land' in clause 1.1 and used those defined terms in clauses 4.4.1 and 4.4.5;

(b) at [204] to [205] of the Reasons that clauses 4.4.1 and 4.4.5 of the Trust Deed did not impose obligations on Giorgi; and

3.2.8. in the circumstances, informed consent of all beneficiaries of the Trust as at the time of Settlement needed to be pleaded and proved by the Respondents to make out a defence of informed consent to the conceded breach of trust by Giorgi in paying the amount of money the subject of the Trust paid to ARF at Settlement to complete transactions materially different from those the subject of the Contract of Sale, which was specifically referred to in, and subject of obligations imposed on the Trustee by, the Trust Instrument (Settlement Breach). Because that defence was neither pleaded nor proved, the Judge erred in not ordering the Trustee to restore to the Trust the full amount disposed of at Settlement plus interest and in not ordering Mr John Cranston and Kingslane to pay to the Trustee the full amount required to enable it to restore the Trust property.

1. Further or alternatively to each of grounds 2 and 3, the Judge erred in fact and law in holding at [370] of the Reasons that Mr McRobert gave informed consent to and acquiesced in the Settlement Breach in that:

4.1. because the Judge erred in not holding that the Pre‑Settlement Transaction modified the Transfer Deed, Side Letter and Lease as detailed in ground 3.2 above, the Judge erred in fact and law in holding at [363] that the material variations of the Contract of Sale at the time of Settlement were limited to variations put into effect by entry into the Side Letter, Transfer Deed and Option Deed;

4.2. further or alternatively to ground 4.1, the Judge erred at [371] in holding that the materials terms of transactions which varied the Contract of Sale (Variation Transactions) were not complicated or difficult to understand, and further erred at [364] in holding that, in the circumstances of the case (which include Mr McRobert having seen some email negotiations in May and June 2009 concerning proposed variation of the Contract of Sale, which the Judge found at [352] did not record the terms finally agreed in June 2009), it was not necessary for Mr McRobert to have been provided with copies of the Side Letter, Transfer Deed and Option Deed or to obtain legal advice about the proposed Variation Transactions in order to understand what was proposed. Because the Judge erred in not according material significance to non‑payment by Kingslane of the $780,000 Initial Lot Contribution to resolution of the issues as to the basis on which the Transfer Deed was made (as detailed in ground 3.2.4) and to the terms of the Pre‑Settlement Transaction (as detailed in ground 3.2.5) and erred at [330] to [331] and [396] as to the materiality of the Option being granted to Kingslane rather than the Trustee, it follows that the Variation Transactions were complicated and difficult to understand and that the circumstances of the case, properly understood, were such, and the Judge erred in not holding, that Mr McRobert could not give informed consent to or acquiesce in the Settlement Breach without:

4.2.1. provision to him of all relevant proposed Variation Transactions documents;

4.2.2. disclosure to him of all relevant information; and

4.2.3. following that provision and disclosure, obtaining of skilled and independent legal advice by Mr McRobert as to whether he should consent to the Settlement Breach,

and further erred in not holding that, because none of 4.2.1, 4.2.2 or 4.2.3 occurred, Mr McRobert did not give informed consent to, or acquiesce in, the Settlement Breach; and

4.3. further or alternatively, the Judge erred in relying on the evidence of Mr John Cranston in reaching the conclusions of informed consent and acquiescence for the reasons in ground 5.

1. The Judge erred in fact in holding at [227] ‑ [232] of the Reasons, on the basis of the principles at [210] ‑ [213] of the Reasons, that Mr John Cranston was generally a credible witness because his evidence was consistent with material objective facts established by contemporaneous documents by reason of:

5.1. the Judge erred at [86] in holding that the reason for sending an unexecuted draft of the Giorgi Trust Deed to National Australia Bank (NAB) prior to 14 May 2009 was not made clear in evidence because Mr John Cranston gave evidence at TS 327 to the effect that, at that stage, only 'hypothetical borrowings' were being considered and 'we hadn't entered into anything with the NAB at that stage';

5.2. the Judge further erred in not holding that evidence was glaringly improbable and not credible because:

5.2.1. as found at [61] of the Reasons, an application for finance to purchase Lot 2009 was made to NAB in early 2009;

5.2.2. by email dated 14 May 2009 (Exhibit A.99), NAB made clear that a Trust Deed in the form of the unexecuted draft provided to it was not approved because it was undated, because it named different companies as the trustee in different parts and because annexures were missing; and

5.2.3. because the Judge found at [273] ‑ [293] that the Trust Instrument had been executed on 29 January 2009, there was no plausible reason for Mr John Cranston to not send a copy of the executed deed to NAB prior to NAB sending the 14 May 2009 email;

5.3. the Judge erred in not holding in the analysis in [102] ‑ [104] or elsewhere in the Reasons that Mr John Cranston's evidence in cross-examination:

5.3.1. at TS 329 that he had arranged for his son, Evan Cranston (who was found by the Judge at [247] ‑ [249] to not be a credible witness), to send the email of 2 June 2009 (Exhibit A.108) quoted in [102] and was satisfied with that email and did not require it corrected showed his evidence was inconsistent with contemporaneous documents and showed him to be dishonest because the statement in point 1 of that email that NAB had approved the trust deed was, as detailed in grounds 5.1 and 5.2, false; and

5.3.2. at TS 330-1 that Mr Engelsman of ARF was working with Mr John Cranston to change the Trust Deed was inconsistent with the penultimate paragraph of that email of 2 June 2009, which requested that ARF not seek that the trust deed be amended because 'that could be a complete nightmare with NAB (who in point 1 of the email were said to have approved the trust deed) is materially inconsistent with the contemporaneous email of 2 June 2009 and glaringly improbable;

5.4. the Judge erred in not holding that Mr John Cranston falsely represented or caused to be represented to both the valuer, Mr Copeland, and to NAB that the amended lease to ARF of proposed lot 26 would only be at a rent of $1 per year pending subdivision for a maximum of 24 months rather than for the entire term of 20 years (False Information), and in not holding the evidence in that regard showed him to be dishonest and that his evidence was inconsistent with contemporaneous documents in that:

5.4.1. having found at [135] that Mr Copeland was provided the False Information because it was included in his valuation (Exhibit A.740 at p.4362), the Judge erred in not finding with respect to the evidence referred to at [133] ‑ [134] (TS 333 and 447) that Mr Arias sent Mr Copeland an email in the form of the draft quoted at [132] because Mr John Cranston approved that draft and did not tell Mr Arias, as he claimed in his evidence, that the draft was inaccurate;

5.4.2. because of the finding at [136], which was based on Exhibit A.157 at p.1404 (a NAB memorandum), the Judge erred in not finding that Mr John Cranston also provided or caused to be provided the False Information to NAB; and

5.4.3. the Judge erred in not treating the falsity of the False Information as material for the reason at [137] that it 'did not appear to materially affect the valuation of lot 2009'. The Judge should have held that, if the valuer had been informed that the only substantially improved part of lot 2009 was potentially to be occupied at nominal rent for 20 years, that information was likely to have materially reduced the freehold value of lot 2009, so that the correct inference was that the False Information was significant in causing the valuation to not be materially reduced; and

5.5. the Judge therefore erred in not rejecting the evidence of Mr John Cranston except where corroborated by contemporaneous documents or other reliable evidence.

6. The Judge erred at [448] to [462] of the Reasons in:

6.1. accepting at [461] the evidence of Mr John Cranston concerning his promotion of managed investment schemes, despite the matters referred to in ground 5; and

6.2. not holding that Mr John Cranston was, when he promoted the Trust, in the business of promoting managed investment schemes within the meaning of that term in s.601ED(l)(b) of the Corporations Act 2001 (CA).

7.1. at [496] to [507] in fact and law in holding that the offers there referred to were personal offers as defined in s.1012E(5) of the CA;

7.2. in law in holding at [508] to [510] that the Trust (which the Judge found at [443] to be a managed investment scheme) should not be wound up under s.601EE of the CA; and

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

Principal Associate to the Honourable Chief Justice Quinlan

[1] Being Lot 2009 on deposited plan 43721 and the whole of the land comprised in certificate of title volume 2593, folio 990.

[2] That the Giorgi Trust was established by the Trust Deed was not in dispute at trial. The appellants pleaded that the Giorgi Trust was so established in the Second Further Re‑Amended Statement of Claim dated 22 June 2018 (Statement of Claim) par 9 (BAB 151). The respondents admitted that allegation in the Further Re‑Amended Defence and Counterclaim dated 8 January 2019 (Defence) par 9 (BAB 178). Remarkably, given the centrality of the terms of the Giorgi Trust to the issues at trial, the appellants submitted in the appeal (for the first time) that the Trust Deed was void (Appellants' submissions, par 10 (WAB 23) (see [126] ‑ [136] below)). Moreover, by ground 3.1 the appellants claim that the learned trial judge erred in holding that the Giorgi Trust was constituted by the Trust Deed. As that ground must be dismissed, for the reasons developed below, we have for simplicity made the observation recorded at [2] above despite this being an issue in the appeal.

[3] Exhibit A.43 - Contract for Sale of Land or Strata Title by Offer and Acceptance dated 30 January 2009 (30 January 2009 contract) (GAB 303 ‑ 308).

[4] Exhibit A.144 - Side Letter to Transfer Deed and Land Sale Contract dated 25 June 2009 (the Side Letter) (GAB 460 ‑ 461).

[5] Exhibit A.148 - Deed between Giorgi, Kingslane and ARF Ltd dated 26 June 2009 (the Transfer Deed) (GAB 462 ‑ 513).

[6] Exhibit A.149 - Ground lease between Giorgi, ARF Picton Pty Ltd and ARF Ltd dated 26 June 2009 (the lease) (GAB 514 ‑ 553).

[7] Exhibit A.150 - Option Deed between ARF Ltd and Kingslane dated 26 June 2009 (the Option Deed) (GAB 554 ‑ 575).

[8] Statement of Claim, pars 7 ‑ 8 (BAB 150 ‑ 151).

[9] Statement of Claim, pars 71 ‑ 74 (BAB 169 ‑ 170).

[10] Statement of Claim, pars 63 ‑ 65 (BAB 164 ‑ 168).

[11] Statement of Claim, par 66 (BAB 168).

[12] Statement of Claim, pars 80 ‑ 85 (BAB 172 ‑ 174).

[13] McRobert Superannuation Pty Ltd v Cranston [2019] WASC 376 (Primary reasons).

[16] Primary reasons [370] ‑ [372].

[17] Primary reasons [215] ‑ [216].

[21] Primary reasons [430] ‑ [431].

[22] Primary reasons [459] ‑ [462].

[23] Primary reasons [496] ‑ [507].

[30] Primary reasons [18], [20], [38], [39].

[32] Exhibit 8 (Detail); Exhibit A.40 (GAB 300).

[33] Primary reasons [251] ‑ [298].

[34] Primary reasons [292] ‑ [293].

[35] Primary reasons [185] ‑ [193].

[36] See the Schedule to the primary reasons.

[41] Primary reasons [80], [82], [84], [505].

[42] Primary reasons [15], [145], [146], [147], [501], [502].

[43] Primary reasons [15], [148] ‑ [152].

[44] Primary reasons [21], [157], [503], [504].

[47] See e.g. Primary reasons [159], [174] ‑ [179], [265] ‑ [269].

[61] As defined in [7] ‑ [10] above.

[68] Primary reasons [132] ‑ [137].

[70] Exhibit A.197 - Copy document titled 'Statement of Purchase' from Norm Heart Settlements (detail) (GAB 598).

[75] Statement of Claim, pars 71 ‑ 74 (BAB 169 ‑ 170).

[76] Statement of Claim, pars 39 ‑ 48 (BAB 157 ‑ 158).

[77] Primary reasons [571] ‑ [574].

[78] Primary reasons [206] ‑ [208].

[79] Statement of Claim, pars 54 ‑ 55 (BAB 161 ‑ 162).

[80] We have not included sub‑par 75.4 of the Statement of Claim as it relates to a claim under the Corporations Act that is not relevant to the appeal.

[97] Primary reasons [359]. The actions taken by Mr McRobert following settlement are set out at Primary reasons [360] ‑ [365].

[99] Footnotes omitted. See also Primary reasons [425], reproduced at [112] below.

[101] Primary reasons [496]. Section 1012E(5) is set out at [27] above.

[108] Primary reasons [509] ‑ [510].

[109] Statement of Claim, par 9 (BAB 151).

[110] Appellants' submissions, par 10 (WAB 23).

[111] Appellants' submissions, par 11 (WAB 23).

[113] See grounds 3.2.6(a)(ii)(A) & (B).

[117] Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal Rules), r 32(4)(b).

[118] Court of Appeal Rules, r 32(4)(d).

[119] McLennan v McCallum [2010] WASCA 45 [80] ‑ [88] (Buss JA); Zerajavic v Chevron Australia Pty Ltd [2020] WASCA 40 [66] ‑ [67] (Buss P, Murphy & Vaughan JJA).

[120] See [109] above.

[121] As will also be seen the 'Settlement Breach' features in ground 4 (specifically ground 4.1) as well.

[122] Appellants' submissions, par 13 (WAB 23 ‑ 24). Footnotes omitted.

[123] Appeal ts 33 ('Well, perhaps it could have been pleaded better. I think that would have to be conceded.'). See also Appeal ts 37.

[125] For example, Trial ts 311, 313, 321.

[131] Lee v Lee [2019] HCA 28; (2019) 266 CLR 129 [55] (Bell, Gageler, Nettle, Edelman JJ); Child and Adolescent Health Service v Mabior [2019] WASCA 151; (2019) 55 WAR 208 [93] - [96] (Quinlan CJ, Murphy & Pritchard JJA); Joyce v Anderson [2020] WASCA 48; (2020) 91 MVR 334 [105] - [108], [128] - [130] (Mitchell JA), [206] - [211] (Beech & Vaughan JJA); East Metropolitan Health Service v Ellis [2020] WASCA 147 [26] (Quinlan CJ, Mitchell & Beech JJA).

[132] Ground 6, which also incorporates ground 5, similarly does not identify any particular finding of fact affected by the challenge to Mr Cranston's credibility.

[133] See e.g. Primary reasons [328], [368].

[134] See e.g. Primary reasons [342] ‑ [366].

[135] Primary reasons [357] ‑ [358].

[136] Appellants' submissions, par 27.3 (WAB 32).

[140] Joyce v Anderson [207] (Beech & Vaughan JJA).

[150] Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 (Maguire), 466 (Brennan CJ, Gaudron, McHugh & Gummow JJ).

[151] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, 139 [107] (Gleeson CJ, Gummow, Callinan, Heydon & Crennan JJ).

[152] See [102(e)] above.

[158] See Primary reasons [301], summarised at [70] above.

[159] Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 42 FCR 390 (Smith).

[160] Appellants' submissions, par 26 (WAB 31).

[161] Smith, 393 (Davies, Sheppard & Gummow JJ).

[164] As to which see Primary reasons [298] (at [110] above). The finding at Primary reasons [298] is not challenged in the appeal.

[165] Primary reasons [208] ‑ [209] (see [109] above).

[166] Primary reasons [425] (see [112] above).

[167] Appellants' submissions, pars [4 ‑ 7 (WAB 21 ‑ 22). Footnotes omitted.

[168] Cotton v Dempster [1918] WALawRp 1; (1918) 20 WALR 14, 17 (Rooth J), 19 (Northmore J).

[169] Swan v Perpetual Executors and Trustees Association of Australia Ltd [1897] VicLawRp 76; (1897) 23 VLR 293, 309 (Holroyd J).

[170] Spellson v George [1992] NSWCA 254; (1992) 26 NSWLR 666, 670 (Handley JA).

[171] Swan v Perpetual Executors and Trustees Association of Australia Ltd, 309 (Holroyd J).

[172] Hayim v Citibank NA [1987] AC 730, 748 (Lord Templeman). As the learned trial judge observed, at Primary reasons fn 245, this principle was referred to, with approval in, Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 (Alexander v Perpetual Trustees) [56] (Gleeson CJ, Gummow & Hayne JJ), [163] (Callinan J); TAL Life Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439 [54] (Leeming JA).

[174] Appellants' submissions, pars 1 ‑ 3 (WAB 21). Footnotes omitted. At the hearing of the appeal, the appellants cited a number of additional authorities following Alexander v Perpetual Trustees, including Cong v Shen [2019] NSWSC 1675, Frigger v Kitay (Liquidator) [2020] FCA 482 (Frigger v Kitay) and Kellett v Schriever [2020] SASC 96.

[175] See Alexander v Perpetual Trustees [55] (Gleeson CJ, Gummow & Hayne JJ), citing Scott on Trusts, 4th ed (1989), vol 4, s282.

[176] Frigger v Kitay, [34] (Colvin J).

[177] Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; (2011) 191 FCR 1 [108] (Besanko J; Finkelstein & Jacobson JJ agreeing).

[178] Maguire, 467 (Brennan CJ, Gaudron, McHugh & Gummow JJ).

[180] Robinson v Western Australia [1977] HCA 46; (1977) 138 CLR 283, 302 ‑ 303 (Gibbs J); Musolino v Sidiropolous (1991) 101 ALR 235, 244 (Beaumont, Burchett & von Doussa JJ).

[181] See [27] above.

[182] See [116] ‑ [121] above.

[183] Appellants' submissions, par 40.7 (WAB 36 ‑ 37).

[191] See Primary reasons, [47], [53], [56], [58], [62], [63], [66], [67], [289].