Supreme Court of SA|2000-03-24|Before: Kennedy J, Olsson J

These proceedings were commenced by summons issued on 14 May 1996. At that point the sole parties were the plaintiff and the first defendant.

By his summons, as originally framed, the plaintiff simply sought the appointment of an inspector, pursuant to the provisions of s 84C of the Trustee Act, 1936, and an order for costs against the first defendant.

In a relatively brief supporting affidavit, having described the existence of the Trust and its nature and given some outline, asserted history of unhappy relationships with the second defendant, the plaintiff deposed that:-

. the second defendant had made it clear to him, from an early age, that the former was in control of the Trust and that he was the one that the plaintiff had to please in order to get anything from it;

. the plaintiff had, in fact, received nothing from the Trust and, in February 1996, following the plaintiff's solicitors making some enquiries concerning the administration of the Trust, the second defendant had telephoned him and said that "there was nothing in the Trust" for him.; and

. the plaintiff had concerns that the Trust was not being administered fairly and properly and that the second defendant (who was his father) had used the powers of the Trust to pursue his own personal interests and to disadvantage him.

Two separate affidavits were also sworn by solicitors for the plaintiff. These outlined enquiries initiated on behalf of the plaintiff, by letter written to the second defendant on 18 January 1996 and subsequent correspondence with the latter's solicitors. They made the points that, on the somewhat incomplete information which had been made available, there was doubt whether proper records had been maintained in relation to the Trust, as required by the Trustee Act 1936 and the regulations made pursuant to it. It was also demonstrated that there appeared to have been various financial transactions which were suggestive of improper administration of the Trust. It was asserted, on the basis of specific information set out in the affidavit, that there was reason to question the bona fides of the exercise of discretions within the Trust and the proper administration of it by the first defendant.

The first defendant appeared to the summons on 7 June 1996.

On 12 July 1996 a brief affidavit was sworn by the solicitor for the first defendant. It simply stated that certain facts were in dispute and baldly denied any inappropriate conduct on the part of that defendant. It contended that some of the content of the plaintiff's affidavit should be struck out, as being of the nature of hearsay.

In an affidavit filed on 23 August 1996 the plaintiff referred to the information which had been gleaned by his solicitor as a result of persistent correspondence; and to apparent breaches of trust and/or maladministration revealed by it. Inter alia, the plaintiff deposed:-

"5. My purpose in bringing these proceedings is to ascertain: 5.1 whether the books and records of the Trust are being kept properly; 5.2 whether all of the books and records of the Trust have been produced to me and my solicitors (which appears not to be the case); 5.3 whether all such books and records as ought to be maintained by the Trustee have in fact been maintained; and 5.4 whether in the light of those documents which have been produced, and those not so produced, there are grounds for seeking the removal of the Trustee on the basis that the Trustee has breached its fiduciary obligations to the Trust and its beneficiaries."

It will, at once, be observed that, at that point, the plaintiff was strenuously seeking to obtain detailed information, which he had otherwise not been able to garner, as a prelude to formulating more specific claims to relief.

After the exchange of further affidavits, the matter ultimately came before Master Kelly on 11 September 1996. Inter alia, the content of the affidavits served to confirm the fact that there had been an apparent use of trust assets for the purposes of OE & DR Pope Pty Ltd (an entity referred to in Pope No 1) and also to raise a substantial advance which, according to bank documentation and other material, was used to provide operating capital for this entity.

It is scarcely surprising that, at that time, having heard extensive submissions on behalf of the parties, the Master made a fiat in these terms:-

"ORDER: 1. The lack of quite crucial documentation and I give the examples lease mortgage documents - and a number of those generally shown in the schedule, coupled with the fact of the existence of a very high unsecured loan and the whole history of this matter leads me unhesitatingly to appoint an inspector. 2. Costs reserved. 3. I invite the plaintiff to submit minutes of the specific order he seeks with liberty to the defendant to speak to those minutes. 4. Adjourned to 2.30pm on 8/10/96 for debate over minutes."

It is stating the obvious to say that, on the whole of the material before him, it appeared that, at the very least, the administration of the Trust had been most unsatisfactory. At worst, there were obvious indications of conflict of interest and possible breaches of trust.

On 25 September 1996 the first defendant lodged an appeal to the Full Court against that order. When the appeal came on for hearing, on 6 March 1997, it was, at the last moment, abandoned by the appellant.

In the circumstances, the Full Court ordered that the appellant, personally, bear the costs of the appeal on a solicitor and client basis. It reserved the questions as to whether it ought to be entitled to an indemnity from the Trust in respect of its liability for the costs, or whether the present second defendant, Desmond Roy Pope, ought, personally, to pay such costs. This was done because the second defendant was not then on notice that an order might be sought against him.

I pause to make the point that, even at that stage, it was quite apparent that it was the second defendant who was "calling the shots", so far as the first defendant was concerned. When the matter came before the Full Court, Cox J, who presided, was constrained to comment:-

"However, the costs order really revolves about the propriety of the trustee bringing an appeal and then simply walking away from it. As Mr Sulan has said, the mere discontinuance of an appeal is not generally visited with a special costs order, but the circumstances of this case, given the nature of the dispute and the evidence that was before the Master and the fact, to which the Court cannot turn a blind eye, that the individual who must have made the decision to appeal is a person whose own financial interests were intimately interwoven with those of the trustee company of which he was the sole personal director, combine to justify the order that Mrs Shaw has sought."

The matter again came before Master Kelly on 16 July 1997, at which time he made an order conferring on the inspector appointed by him ("the inspector") detailed powers pursuant to s 84D of the Trustee Act, related to the conduct of the investigation.

On 8 December 1997, the first defendant filed an application for directions concerning the scope of the inspector's powers and an order that the plaintiff provide security for the payment of the inspector's fees. That application was referred to me by a Master.

In essence, the first defendant sought to contain the scope of the inspector's enquiry, so as to exclude issues of possible breaches of trust and to raise issues of apprehended bias, absent provision of proper security for his fees, because, that defendant asserted, it would appear "that there would be greater prospects of him [the inspector] recouping his fees if he produces a report which is adverse to the Trustee" - given the admittedly poor financial position of the plaintiff.

The application came before me on 19 December 1997, at which time Mrs Shaw, of senior counsel for the plaintiff, complained that it was no more than a delaying tactic and was, in the circumstances, entirely without merit. The matter was stood over until 23 December 1997. At that time, counsel appeared for two other potential beneficiaries of the Trust and foreshadowed a possible intervention by them and (possibly) at least one other beneficiary.

During the discussion which then occurred (and in the course of which counsel for the defendant sought, for the first time, to raise the jurisdictional validity of the order which had been the subject of the appeal to the Full Court) I had this to say:-

"... Let me make my situation quite clear. I have spent some hours since we last met reading this file from top to bottom, so that I can get a real feel for what this is all about. I have not, in any sense, closed my mind to the matters that are sought to be debated, but I must say my initial reaction is that there is a strong argument in favour of the proposition that much, if not most, of what is sought now to be debated is just topics that are, in effect, foreclosed by the orders that have already been made. It seems to me, there is a very strong argument in favour of asserting that these matters simply can't get off the ground as a matter of merit. I have not got a closed mind on it, I'm just saying there's a strong argument. I put the parties on notice that if they persist in dealing with this matter and they fail, well, then I would regard it as a matter in which solicitor and client costs ought to be ordered against those who fail for the reasons that I have mentioned. In any event, the parties should be under no illusion as to what my attitude would be in those circumstances. Now, of course, I don't talk about the application of the inspector who is entitled to bring appropriate applications."

The matter was adjourned over to 13 January 1998, for full argument.

On that date, counsel for the first defendant intimated that it did not persist with the substance of its application. The proposed interveners also indicated that they were content that their application for leave to intervene be stood over for the time being, pending receipt of the inspector's report. An application by the inspector for an order as to his fees was adjourned until completion by him of his preliminary report. An application by the plaintiff as to costs thrown away was adjourned to 25 February 1998.

A preliminary report of the inspector was filed on 23 February 1998. On 25 February 1998 I directed that it be released to the parties for consideration. Inter alia, it was reported by the inspector that, leaving to one side matters as to which deeper investigation seemed desirable, in his opinion:-

(1) the Trust had been operated without appropriate accounting records;

(2) the affairs of the Trust had been intermingled with the affairs of other entities associated with the defendant;

(3) the Trust had entered into transactions which did not appear to be for its benefit, but, rather, for the benefit of associated entities, especially OE & DR Pope Pty Ltd; and

(4) a pattern of distributions excluding certain beneficiaries was discernible.

On 4 March 1998, on the basis of the preliminary report, the plaintiff filed an application which sought a variety of relief, including removal of the first defendant as trustee of the Trust, a widening of the mandate of the inspector to pursue additional investigations, an order restraining disposition of trust assets and orders as to costs against the first defendant, on the basis that it be restrained from indemnifying itself in respect of them from the assets of the Trust.

On 6 March 1998 I directed taxation of the fees of the inspector and that they be paid out of the Trust assets, in the first instance.

At that time, I expressed concern at the escalating costs which were being incurred and urged the parties to consider the possibility of mediation. I also made an order granting leave to amend the original summons, so as to provide a proper jurisdictional basis for seeking the relief then sought, consequent upon the report of the inspector.

I digress to point out that, in the course of the present debate as to costs, Mr Ross-Smith contended that the costs of and incidental to the amendments so sanctioned (and later made) should be disallowed against the plaintiff and, in fact, allowed to the first defendant. I regard that suggestion as little short of preposterous. As readily emerges from the transcript related to the application, I adopted the expedient of giving leave to amend to avoid the very considerable expense of initiation of completely fresh proceedings based upon the report.

It is to be recalled that there had been a long history of inability to secure adequate information concerning the administration of the Trust and, until this finally came to hand via the inspector's report, there was simply no adequate basis for the formulation and prosecution, by the plaintiff, of an application for definitive relief.

The course pursued by the plaintiff was entirely reasonable in the circumstances, given that the amendments were not actually made until some time later, because discussions were in train between the intended parties. There is no good reason why the costs of the amendments should not be treated as a normal step in the litigation. It is significant that no costs issues were foreshadowed when the order with leave to amend was actually made.

The proceedings came before me for report on 7 April 1998, when it was indicated that some attempts were being made towards a possible mediation. In early June 1998, steps were taken to attempt to initiate a mediation before Williams J, but these proved to be abortive.

On 16 June 1998, I ordered that the plaintiff file points of claim in relation to the relief sought by way of amendment. These were filed on 9 July 1998.

On or about 28 July 1998 the present second defendant wrote to my Associate, consequent upon being served with the amended summons and the plaintiff's points of claim. He intimated that he did not propose to appear or be represented, but would abide by the decision of the court after it had heard other parties.

When the matter was called on, on 7 August 1998, Mr Ross-Smith mooted the possibility that the first defendant might be prepared to retire by arrangement with the second defendant, who would, in such circumstances, exercise his power of appointment of new trustees. This proposition subsequently foundered, because agreement could not be reached as to the appointment of persons accepted, by the plaintiff and certain other potential beneficiaries, as being truly independent. The second defendant had indicated an intention of appointing persons said to be his business and social associates.

On 27 August 1998, the second defendant appeared before me by counsel, in his capacity as potential appointor. He was first given leave to intervene and then joined as a defendant, on the oral application of Mrs Shaw QC. A formal order was made for intervention by three persons who were potential beneficiaries under the Trust.

What followed was something of an avalanche of documentation, including one affidavit sworn by the second defendant, which ran to some 65 pages and exhibited a large number of documents.

Following lengthy submissions, I published written reasons for the conclusions to which I came on 5 November 1998. I then ordered that the first defendant be removed as trustee and that two independent, joint trustees be appointed to replace it.

This prompted an appeal to the Full Court by the second defendant. He also applied to me for a stay of the order appealed against. Having heard counsel I had this to say:-

"... I must confess that, in this matter, I perceive a continuance of the same air of practical unreality that seems to have pervaded this unfortunate matter at all stages. That aside, having heard what has been put to me, it seems to me that the submissions that have been advanced by Mrs Shaw and supported by Mr Frost are really unanswerable. I do not see that this is a matter in which it is appropriate to prolong the agony by granting a stay. It is important that the problems of administration in this trust be addressed and addressed as a matter of prompt action. In substance, therefore, I decline to grant the application which has been made to me. However, I am prepared to extend the stay for a period of 14 days simply for the purpose of allowing the present applicant the opportunity, if he desires to do so, of renewing an application for a stay to the Full Court, but for that purpose only. In substance, I refuse the application. Application refused save that the stay be extended for 14 days to enable the applicant, if so advised, to renew an application for stay before the Full Court."

True to form, the second defendant renewed the stay application before the Full Court. That court rejected the application on 30 November 1998. It ordered the second defendant to pay the costs of both the appeal as to the stay and the proceedings before me.

On 12 February 1999, I made an order vesting a property which comprised the main asset of the Trust, in the new trustees.

The appeal as to the removal and replacement of the first defendant was argued before the Full Court on 13 May 1999. That Court dismissed it on 13 August 1999, as earlier recited.

By order dated 15 November 1999 I, inter alia, authorised a sale of the above property.

It only remains to record that these proceedings to date are by no means the end of the contentions arising between the relevant parties. The new, independent trustees have reconstructed accounts related to the dealings between the first defendant and O E & D R Pope Pty Ltd, from which it is said, on the basis of their calculations, that there is $949122 due by the latter to the former. This contrasts with an earlier assertion, by the second defendant, that the Trust is actually indebted to O E & D R Pope Pty Ltd in the sum of about $300000. That and other related issues will need to be resolved in due course. I need not concern myself with them at this point. Both defendants will be entitled to their day in court concerning them.

What emerges from a study of the course of this litigation is that every possible impediment has been placed, by or at the instance of the defendants, in the path of the plaintiff in the attempted enforcement by him of his undoubted rights. No stone has been left unturned in attempting to circumvent his efforts. It is fair to say that all of those strategies have failed. There can be no doubt that the plaintiff's concerns have been justified at all stages; and that the obvious inference is that the defendants have deliberately placed a continuing series of impediments in his path, in order to avoid detailed scrutiny of what has occurred at their hands. In the result, enormous legal costs have been generated.

The first defendant is a proprietary company, of which the recorded directors are the second defendant and a company known as WB Finnie & Co Pty Ltd. ("Finnie"). As I pointed out in Pope No 1, it is difficult to see how, conformably with the provisions of section 221 (3) of the Corporations Law, Finnie could, currently, be a director of the first defendant. Be that as it may, the second defendant is the largest individual shareholder in Finnie and a director of it. I infer from the material before me that not only has he, in practical terms, controlled Finnie and its decision making processes, but he has, likewise, personally controlled the decision making processes of the first defendant at all relevant times. I will, in due course, expand on the reasons for so concluding in due course.

Mr Ross-Smith, of counsel for both defendants, strongly contends that there is simply no evidence to warrant such a conclusion; and that there had been no opportunity for either defendant to respond to any factual assertions which have been put against it. He said that it would be unfair to draw inferences adverse to the defendants when they had not had an opportunity of fully ventilating a variety of factual issues identified in the affidavits filed.

It is true that, in proceeding to make my order removing the first defendant as trustee of the Trust, I refused to allow the proceedings to degenerate into a lengthy witch hunt on a whole host of peripheral, or collateral, facts and assertions. Any allegations concerning a series of possible breaches of trustee by the first defendant, adverted to in affidavits filed, remain for future consideration. They are simply not in issue and do not require review for present purposes. All that need be said is that there are matters raised by the plaintiff which clearly merit further, separate investigation. I pointed out that, on any view, information before me, which was beyond dispute, clearly disclosed that the administration of the Trust by the first defendant had been manifestly unacceptable. A review of the other factual issues identified in various affidavits could not gainsay that simple fact.

After considering the vast amount of affidavit and other documentary material placed before me I, inter alia, expressed the opinion, in Pope No 1, that the material then before the court disclosed that:-

. There had been a total failure, at all times, to maintain proper trust records as required by statute and applicable regulations; trust funds had been consistently intermingled with those of O E & D R Pope Pty Ltd, a corporate trading entity controlled by the second defendant; there was good reason to suspect that certain purported trustee's minutes as to allocations to beneficiaries were spurious; and that the meetings which they purport to evidence did not take place;

. Large money loans had been raised on the security of the major trust asset and had been on-lent, on an unsecured basis, to O E & D R Pope Pty Ltd. Those transactions had not been for the benefit of the Trust, but for the benefit of the corporate entity in question;

. The structure of the Trust management arrangements and the lending and certain other financial transactions had been such that they inherently gave rise to conflict interest situations;

. It was plain that, even on the affidavit sworn by the second defendant, the Trust had been administered not on an independent, objective basis - but, rather, to reflect the personal views, prejudices and wishes of the second defendant and also to further his own commercial interests (through O E & D R Pope Pty Ltd) - regardless of whether he had acted in good faith or not.

By way of summary, I expressed the opinion that "the administration of the Trust has been about as inappropriate and unsatisfactory as one can imagine, short of actual dishonesty ". I there employed the word "dishonesty" in its traditional, common law sense.

In its reasons published on 13 August 1999, the Full Court was content to accept that, leaving aside the question of relationships of the new trustees proposed by the second defendant with him, that summation was a justified resume of the material before the Court at that time; and that manifest conflict of interest situations had arisen in relation to the second defendant.

The decision making process of the first defendant

In my view, it readily appears from the whole manner in which the present proceedings have gone forward and the material placed before me by the parties, that compelling inferences must be drawn. They are that the decision making processes related to the conduct of the first defendant, both as trustee generally, and also as litigant, have, at all material times, been dominated and directed by the second defendant.

It is true that the second defendant became a formal, separate party to the present proceedings, in his personal capacity, at a relatively late stage. However, I entertain no doubt that, whilst the first defendant remained the sole defendant named in the litigation, its actions were (as was perceived by the Full Court), de facto, dictated and controlled by the second defendant. It is impossible, in absence of any other plausible explanation, to conclude other than that the second defendant has, at all times, maintained and financed the resistance by the first defendant, of these proceedings. As I will shortly demonstrate, the latter is a bare trustee entity and there is no evidence to suggest that it has any separate assets of its own. There were no liquid assets of substance within the Trust.

Indeed, the material in this case renders it abundantly apparent that it has been the second defendant's apparent personal, seemingly implacable, antipathy towards the plaintiff which has brought about the regrettable course which this litigation has had to pursue. Despite many pleadings on my part for the adoption of a commercially sensible approach to the resolution of the problems which have arisen, his attitude has appeared to be utterly intractable. In the result, it is impossible to escape the conclusion that what has occurred over a long period of time has not been a reflection of the objective decision-making process and a proper dispassionate exercise of discretion which is to be expected of a trustee. In truth, it is patently obvious that the attitude and actions of the first defendant have, in reality, been those of the second defendant.

It has been the impassioned submission of Mr Ross-Smith, of counsel for both defendants, that such a conclusion is simply not open, because of a dearth of direct evidence on the issue of control and absent an opportunity for his client to call detailed evidence on the point.

Whilst it must be acknowledged that there is no direct evidence of the precise nature and extent of the control exercised by the second defendant, the inference which arises, on the whole of the material before me and the course which the proceedings has taken, is, as I have said, compelling.

I have already referred (in the reasons in Pope No 1 and these reasons) to the evidence as to the inter-locking structure of the various corporate entities; and to the fact that the only directors of the first defendant are the second defendant and Finnie, of which he is a director and the largest individual shareholder. Added to that situation are these factors:-

(1) In his own affidavit sworn on 1 September 1998 the second defendant specifically deposed that he was, originally, the sole director of the first defendant; and that, since the appointment of the corporate co-director, he has been "chairman of the Trustee company and have always had the casting vote". He went on to say that "A decision of W B Finnie & Co Pty Ltd cannot prevail without my agreement";

(2) The whole atmosphere of the present proceedings clearly indicates that the conduct of the defence has, at all stages, been orchestrated by the second defendant. If confirmation of that is required, one need do no more than note the key features of the progress of the proceedings and the abortive appeals within them, as earlier recited, and then read the 65 page affidavit of the second defendant above adverted to;

(3) In relation to the financial dealings with O E & D R Pope Pty Ltd, adversely commented upon in the report of the inspector, it is clear, on the statements made by the second defendant in his affidavit, that such company is now wholly owned by him and that the arrangements come to, as adverted to by the inspector, were the product of decisions made by the second defendant;

(4) The inspector's report reveals that, at all material times, no separate bank accounts were maintained either for the Trust or the first defendant. All relevant transactions had been intermingled with other transactions of O E & D R Pope Pty Ltd in its bank account; and

(5) The whole tenor of his own affidavit is consistent only with the conclusion that, at all material times, the second defendant has effectively made all relevant decisions in relation to the Trust and the administration of its assets.

Against such a background, how it can seriously be suggested that the second defendant has not, at all stages, effectively controlled the first defendant and its decision making processes presently eludes me. It has been apparent to me, at all stages of the litigation, that he has, effectively, given instructions for the conduct of the defence. It is no accident that both he and the first defendant have been represented by the same solicitor and counsel, at least until, in recent times, he was formally joined as a separate defendant.

Quite apart from those features to which I have referred, and as the Full Court commented in its most recent judgment, I was faced, in these proceedings, with a factual position of having received a report from a Court appointed inspector which disclosed serious administrative irregularities and apparently ongoing breaches of trust by the trustee. The situation was sufficiently serious to justify the ultimate removal of the first defendant as trustee. At the same time, that report impeached the conduct of the second defendant, as both director of the first defendant and also a director of the corporate co-director of the first defendant, in respect of transactions in which he, or a company or companies controlled by him, had an interest.

I have dwelt upon these matters at some length because they readily serve to illustrate that this is a situation in which, in order to do justice between the parties, it is necessary to pierce the corporate veil. For all practical purposes, the true defendant party in these proceedings has, at all material times, been the second defendant.

A striking feature of the litigation has been the obvious strategies which have been orchestrated by the second defendant, at all stages, initially in withholding information and, later, in an attempt to prevent the plaintiff from securing or obtaining the benefit of the relief which he has ultimately achieved in these proceedings. It is fair to say that there has been no merit whatsoever in any of the resistance offered to the plaintiff's claims to relief. It is indicative of the conduct of the second defendant that, even when the writing was on the wall, he attempted to protect a claimed right to appoint new trustees, who proved to be business and social associates of his, based in Melbourne. This was, as it seemed to me at the time, a thinly veiled attempt to continue to exercise some degree of continuing personal influence over the administration of the Trust.

It is significant that, on no less than two occasions, the Full Court took such an adverse view of what was occurring in relation to defence appeals to it, that it was constrained to make orders as to costs which expressed censure of the conduct of the respective defendants concerned. There can be no question but that, in reserving the question of ultimate liability to pay the costs ordered on 6 March 1997, the Full Court expressly contemplated a possible need to examine the relevant conduct of the second defendant and whether this was such as to warrant an order that he, personally, ought to bear that liability.

It is against the foregoing background that the present submissions fall to be considered.

Mr Keen, of counsel for the plaintiff, has stressed that it has clearly emerged that his case as to the issues which have been so far addressed, was patently irresistible from the outset; and that the first defendant has never been able to point to any substantial justification, in fact or law, for resisting the relief claimed. The inevitable conclusion must be that it did so merely to give effect to the personal attitude of the second defendant, at his behest. Enormous costs have been generated as a result of the conduct of the two defendants, to the point that it may well be that, if the Trust had to bear the impact of them, the trust assets would either be entirely consumed or, possibly, even be inadequate to satisfy them.

I pause to comment that I have been left with the distinct impression that that may well have been one of the goals of the second defendant, with a view to ensuring that, even if he was successful, the plaintiff would, at the end of the day, experience a Phyrric victory.

Counsel for the plaintiff contends that it necessarily follows that the conduct of the first defendant, inspired by the second defendant, was never intended to be in the best interests of the beneficiaries of the Trust. It constituted a patent breach of trust. He argues that it has been demonstrated that the conduct of the first defendant in the proceedings has been so unsatisfactory, in remorselessly pursuing un-arguable contentions and defences, thereby putting the plaintiff to enormous, unjustified expense, that the plaintiff should recover his costs on an indemnity basis. (Cf Adelaide Congregation of Jehovah's Witnesses v Pegasus Leasing Ltd & Anor (No 2) (Olsson J, 24 December 1996, S5968, unreported).

In my view, that submission is unassailable on the facts. I uphold it. I further conclude that the first defendant's resistance to its removal was wholly unreasonable in light of the inspector's report. It was not mounted, bona fide, in the interests of the beneficiaries, but simply as a self justification exercise, inspired by the second defendant. It was thus, itself, a breach of trust (Gava & Anor v Grljusich & Anor (Kennedy J, WASC, 22 February 1996, unreported). See also Miller v Cameron & Ors [1936] HCA 13; (1935-1936) 54 CLR 572 at 579.) In so doing, I specifically reject the constant cri de couer of Mr Ross-Smith that the defendants have not had an opportunity of being heard in evidence as to the many factual issues sought to be raised by them; and that, accordingly, it is inappropriate that adverse conclusions be drawn against them. This oft repeated submission overlooks the point that the issues sought to be canvassed by him are essentially peripheral to the core issues arising for consideration. At best, they are matters which may need further investigation in the future. My immediate concern lies with the attitudes of the defendants (including the second defendant prior to his formal joinder as a party) in relation to the conduct of the present proceedings to date; and the propriety of them.

The real question is as to how those costs ought to be borne.

Leaving to one side the issue reserved by the Full Court, there can be little doubt that, in the circumstances of this case, the plaintiff's costs generally ought, normally, to be borne by the trustee of the Trust; and not be a charge on the trust estate. (Perkins v Williams (1905) 22 WN 107). However, it is obvious, from the limited material presently available, that the first defendant is not a commercial, trading entity. Its sole reported activities have been as trustee of the Trust.

It is obvious that, save for any lawful right of indemnity from trust assets, it does not, in its separate capacity, have non-trust assets of substance with which to satisfy any order for costs made against it. A balance sheet, as at 30 June 1983, exhibited to the affidavit of Matthew Selley sworn on 18 December 1997 reveals that the first defendant has an issued capital of $2 and no assets other than any right of indemnity from the Trust. In a memorandum attached to a letter written by its solicitors on 12 May 1998 it is stated that the first defendant did not have funds with which to meet the inspector's fees.

I agree with Mr Keen that is a fair question to ask how it has been that the first defendant has pursued the course of action upon which it has embarked, at great costs with the aid of solicitors and counsel, without recourse to the Trust assets, or any separate assets of its own? The answer is obvious. I entertain no doubt that, it has, at all stages, not only been directed, but also funded, by the second defendant to do so, to give effect to his own personal attitude and desires, regardless of the best interests of the Trust and its beneficiaries. It is clear to me that the second defendant, prior to and following his joinder, simply utilised the first defendant to pursue his own agenda against the plaintiff. No other inference is reasonably available on any dispassionate appraisal of what has occurred.

There can be no question as to the power of the court to make an order for costs against the second defendant as from the lastmentioned date. The question which initially arises for consideration is as to whether a proper exercise of judicial discretion extends to the awarding of costs against that party prior to his formal joinder, as above recited.

As to this I take, as my commencement point, the decision of the Full Court in Vestris & Anor v Cashman & Anor (1998-99) 72 SASR 449 ("Vestris") . It was there confirmed that the reasoning of the High Court in Knight v FP Special Assets Limited (1992) 174 CLR 178 ("Knight"); and Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 was applicable to s 40 of the Supreme Court Act 1935. Accordingly, there is clear jurisdiction, exerciseable by this court, to make an order for costs against a person who is not a party to litigation, where the special circumstances of the case justify such course.

In Vestris I attempted a summary of the salient principles, which emerge from the authorities therein cited, bearing on the proper basis of exercise of discretion to make an order of that type. I there pointed out that the mere fact that a non party may have benefited from litigation, by itself, was not a proper ground for an adverse exercise of discretion. On the other hand, where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has at all stages, maintained and funded it and/or had a direct personal financial interest in the result, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself, should the proceedings fail or be discontinued. I further indicated that the existence of a special, personal interest in, or potential benefit from, the litigation is a critical factor warranting an order against a non party.

The mere provision of some funding towards the legal costs of the unsuccessful party, by the non party, may not, normally, be sufficient. Usually, there must be other factors justifying the exercise of a discretion against the funding party. It is not, however, necessary to prove fraud, bad faith or some improper motive on the part of the non party, although the existence of any element of that type would, of course, be a highly suasive factor.

To adopt expressions used in Knight, it is clear that, in the instant case, the second defendant has always been the effective litigant standing behind the first defendant, or the "real" party to the litigation, even prior to becoming involved in the matter as a formal party. Moreover, what has effectively been in issue in this matter has been undoubted maladministration of the Trust, obviously orchestrated by the second defendant personally, whilst he, himself, stood in a conflict of interest situation. Whilst it is true that he may not, necessarily, have participated in this action in furtherance of his own direct, personal financial benefit, in the strict sense of that expression, he certainly has done so in furtherance of his own personal agenda, rather than that of the beneficiaries. It is also fair comment to say that his conduct within the litigation appears to have been such as, inter alia, to attempt to avoid, delay or obscure any effective independent scrutiny of what, prima facie, have been clear, apparent breaches of trust, which have plainly occurred at his instance.

That being so, the conceptual situation of this case would appear to fall fairly and squarely within the following dictum of Mason CJ and Deane J in Knight at 192 - 193:-

".... we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made."

(See also the reasoning of Einfeld J in Oz B and S Pty Ltd v Elders IXL Ltd [1993] FCA 371; (1993) 117 ALR 128).

In my opinion the circumstances of this case are such as to demand that the primary order for the payment of the plaintiff's costs must be made against the second defendant, in respect of the whole of the former's costs of action. Moreover, such are the facts of this case that they attract the type of reasoning adverted to by Moynihan J in Re Talk Finance and Insurance Services Pty Ltd (1994) 1 Qd R 558.

As I have sought to demonstrate, the resistance to the applications made by the plaintiff was futile and foredoomed to failure. Massive liabilities for costs have been generated as a consequence of the intractable attitude of the second defendant. The contentions which he has put forward as to the various issues arising for decision have all been lacking in substance and merit. Such a situation not only calls for an order for costs to be payable by him, but also demands that those costs be allowed in favour of the plaintiff, on the basis of an indemnity.

By a parity of reasoning, it seems to me that there should also be an order that the second defendant pay to the plaintiff, the costs of the appeal which came before the Full Court on 6 March 1997, in due discharge of the primary liability of the first defendant in that regard.

Mr Ross-Smith sought to avoid such a conclusion by declaiming that an essential pre-requisite ingredient for bringing the situation within the principle above adverted to is missing in the instant case. It can, he said, only be invoked in cases in which it can be demonstrated that the trustee is shown to have no means of meeting any liability for costs. That cannot here be demonstrated, because, on any view, the first defendant remains entitled, in law, to an indemnity, out of the trust assets, for any costs ordered to be paid by it to the plaintiff.

Mr Ross-Smith drew attention to the recent decision of Lander J in Rouse & Ors v IOOF Australia Trustees Limited (No 3) [1999] SASC 208 ("Rouse"). He relied upon the reasoning and authorities referred to in it for the propositions that:-

(a) even if the trustee's conduct warrants the making of an order for indemnity costs against it, this does not, automatically, lead to a conclusion that the trustee is disentitled to indemnity for those costs out of the trust assets; and

(b) in any event, In re Jones. Christmas v Jones [1897] 2 Ch 190 establishes the specific categories of situation in which there is such a disentitlement. The instant case does not fall within them.

The judgments in In re Beddoe, Downes v Cottam [1893] 1 Ch 547 at 558 and National Trustees Executors & Agency Company of Australasia Limited & Anor v Barnes & Ors [1941] HCA 3; (1940-1) 64 CLR 268 at 277 - 279 ("National Trustees") establish the fundamental proposition that a trustee is entitled to be indemnified out of the trust estate against all his proper costs, charges and expenses incident to the execution of the trust, provided that they have not inappropriately been incurred. As Lander J said in Rouse (at page 5):-

"Whether costs have been properly or not properly incurred is a matter of fact. In that determination regard will be had to whether the trustee could have sought advice and directions from the court; the legal advice which was taken; the circumstances in which the litigation arose; whether it was initiated or defended by the trustee; the real prospects of success of the litigation; the person or persons who would have benefited in a successful conclusion of the litigation; the conduct of the trustee in the litigation and the result of the litigation."

I took Mr Ross-Smith to suggest that, in the course of his judgment in In re Jones, Christmas v Jones [1897] 2 Ch 190 at 197 - 198 Kekewich J identified four exclusive sets of circumstances in which a trustee who had engaged in unsuccessful litigation could be said to have improperly incurred costs. To adopt the summary of Lander J, the situations adverted to by Kekewich J were:-

"First if a trustee is found liable for a breach of trust and the trustee has incurred costs in resisting the claim against the trustee the trustee is not entitled to recourse to the trust funds to indemnify the trustee in respect of those costs. Secondly if a trustee brings a claim which ex facie on the evidence and documents could not honestly be brought forward then the trustee is not entitled to recourse to the trust funds. Thirdly if the trustee is motivated by dishonesty then, of course, the trustee is not entitled to indemnity in respect of the trustee's funds. Kekewich J then identified a fourth category which he described as a 'claim ... of a monstrous character' which he defined as; 'one which no reasonable man could say ought to have been put forward'. In those circumstances the trustee should not be entitled to indemnity for the trustee's costs; 'even though the executor may have believed it, and a solicitor may have prepared the case and counsel may have argued it; in such a case the Court has quite sufficient power to deprive the executor of his costs, or even to make him pay the costs he has occasioned to the estate."

The first point to be made is that I do not accept that the categories of situation identified by Kekewich J must be taken as exclusive. They are no more than illustrative. As Lander J pointed out, what is involved in an assessment of a trustee's conduct is essentially a matter of fact, in relation to which the types of consideration summarised by him must be taken into account.

So much emerges from the decision of the Full Federal Court in Adsett v Berlouis & Ors [1992] FCA 368; (1992) 37 FCR 201 at 212:-

"It is neither possible nor desirable to attempt to identify all of the situations in which costs expenditure would not be regarded as proper. Nor is it profitable to attempt a detailed rule covering all circumstances. But we issue the caution that the language in some authorities, many of which relate to gratuitous trustees, may mislead. Sometimes that language appears to require a degree of personal misconduct or wilful recklessness, as opposed to mere negligence, mistake or breach of the trustee's duty as set out above. We do not think that such a limitation can stand with cases such as Beddoe, which in our opinion correctly express the law. If the expense is one prudently and reasonably incurred in the discharge of the trustee's proper duties, there is a right under the general law to be indemnified out of the trust estate. If the expense is not so incurred or is unreasonable or unnecessary, there is no right under the general law to indemnity because the expense is not 'properly incurred'."

I respectfully adopt that dictum as a correct statement of legal principle.

In the instant case the irresistible inference is that the resistance by the trustee to what proved to be the plainly justifiable claims by the plaintiff was not truly incident to the proper execution and for the benefit of the Trust. Rather, it was, as I have pointed out, conduct orchestrated by the second defendant for his own, collateral purposes. The conduct upon which the first defendant has consistently embarked in these proceedings is such that no reasonable person could say that it ought to have been embarked on. I regard as quite unreal the bland submission of Mr Ross-Smith that all that the first defendant has done, consistently with its duty, has been to provide relevant information, abide by the decision of the court and then offer to resign. Such a suggestion verges on the fanciful and constitutes an almost obscene distortion of what has actually occurred. It is certainly totally inconsistent with its initiation of the original appeal from the order of the Master.

The report of the inspector graphically portrayed the totally unsatisfactory state of the administration of the Trust. That, combined with the abortive Full Court appeal which was abandoned at the last moment and resulted in an order for indemnity costs against the appellant (with consideration being adjourned of the question of whether there should be an order that the costs be paid by Desmond Roy Pope personally) speaks volumes for the lack of bona fides on the part of the first defendant. It also reflects its obstinate and unreasoning failure from the outset, at the obvious instance of the second defendant, to recognise and accept the inevitable. To the extent that it could fairly be said to have merely sought to defend itself against the plaintiff's allegations, it was patently seeking to defend the indefensible. As I have already said the many factual issues which the defence has sought to advance are essentially peripheral and distract attention from the core questions to be addressed.

The second point to be made is that, having regard to the type of reasoning expressed by the Full Court in In the Will of Thomas Field. The Ballarat Trustees, Executors and Agency Co Ltd v Field & Ors [1930] ArgusLawRp 82; [1931] VLR 37 at 52, SCR 101.01(2) must be taken to have modified the common law principle in any event. The effect of that provision is that the Court is to have a general discretion, inter alia, to deprive a trustee of a right of indemnity out of the trust assets where such trustee has unreasonably carried on, or resisted, proceedings. In the instant case, there is no question in my mind that the conduct of the first defendant has been quite unreasonable, in the sense contemplated by SCR 101.01(2).

As a final, fall back position, Mr Ross-Smith drew attention to Clause 9 of the deed of trust for the Trust. This stipulates that:-

"9. N_o trustee purporting to act in the execution of the trusts and powers hereof shall be liable for any loss not attributable to that Trustee's dishonesty or to the wilful commission or omission by that Trustee of an act known to be a breach of trust and in particular no Trustee shall be bound to take any proceedings against a co-trustee for any breach or alleged breach of trust committed by such co-trustee."_

He argues that the provisions of the trust deed "are paramount". The first defendant cannot be made liable for any loss that is not attributable to its dishonesty, or the wilful commission or omission by it of an act known to be a breach of trust. He contends that no such finding has been made, or is possible on the material currently before me.

It seems to me that there are three answers to such a contention.

First, the clause is aimed at the protection of a trustee who, bona fide, acts in execution of the trusts and incurs a loss by so doing, even if the action may prove to be a breach of trust.

It is not an absolute protection against any conduct, generally, of a Trustee. The question of the incurring of the costs in these proceedings has nothing to do, per se, with any execution of the trusts, resulting in a loss. It is a liability which has been incurred because the trustee has conducted itself inappropriately in the proceedings, by not acting in purported execution of the trusts, but merely acceding to instructions given by the second defendant, to further his own desired personal strategy against the plaintiff.

Second, the very basis on which the first defendant is disentitled to indemnity from the Trust assets at common law reflects wilful actions on its part, which it must have known were not bona fide for the benefit and furtherance of the Trust. In the relevant sense, they did constitute wilful breaches of trust, in the sense contemplated by the Clause.

Third, it may reasonably be asserted that the liability for costs was, in fact, incurred as a consequence of the "dishonesty" of the first defendant, in the relevant sense. In his article "The Exclusion of Liability for Trustee Fraud" (1998) 6 APLJ 41 G E Dal Pont makes the obvious point that the extent of operation of any exclusion clause in a trust deed is very much dependent on the precise language employed in it.

So it is that in Armitage v Nurse & Ors [1997] EWCA Civ 1279; [1997] 2 All ER 705 ("Armitage"), an authority from which the first defendant sought to draw comfort, the use of the phrase "actual fraud" was found to be of particular significance. (The emphasis is mine.) The word "actual" was held to manifest an intention to exclude the notion of mere equitable fraud.

In that case Millett LJ held (p 711) that, in context, the expression "actual fraud" connoted, at the minimum, an intention, on the part of the trustee, to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries, or being recklessly indifferent whether it is contrary to their interests or not.

His Lordship expressed the view that the effect of the clause was to exculpate the trustee, so long as he has not acted dishonestly. Mere negligence, imprudence, or breach of trust would not avoid the exclusion.

As I read his reasons, Millett LJ did not seek to equate "actual fraud" with the common law tort of deceit. On the other hand he seems to have adopted the view that what was in contemplation was something more than mere equitable fraud. There needed to be some element of specific, dishonest intention to bring a situation outside the exclusion provision.

Millett J concluded his reasoning by saying:-

"In my judgment cl 15 exempts the trustee from liability for loss or damage to the trust property, no matter how indolent, imprudent, lacking in diligence, negligent or wilful he may have been, so long as he has not acted dishonestly."

In his article Dal Pont pointed out that, by way of contrast with such a formulation:-

"... As equitable fraud is not limited to conscious wrong-doing or over-reaching, it does not depend upon proof of subjective knowledge in the defendant of the relevant facts. It depends, rather, upon whether what has happened, in the context in which it has happened, appears to the judicial conscience as so unconscientious that it should not be allowed to stand_. What is involved is, in substance, a situation or conduct evidencing a want of probity of a nature sufficient to invoke the intervention of a court of conscience. In this context the term 'unconscionable' is used in a broad sense interchangeably with the terms 'unconscientious', 'inequitable' or the phrase 'inconsistent with fair dealing'._ (Emphasis has been added.)

(See also Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 553 - 561.]

The reasoning of Millett LJ is to be contrasted with that of Scott J in Honey v McLennan & Ors [1996-1997] 18 WAR 384. Having stressed that the outcome in Armitage was directly related to the use of the word "actual", Scott J, in any event, questioned the correctness of the decision of Millett LJ, because it did not appear to take into account the reasoning of the prior decision of the Court of Appeal in Applegate v Moss [1971] 1 QB 406.

In the lastmentioned case, albeit in a statutory setting, Lord Denning MR stressed that the concept of fraud, in the equitable sense, does not necessarily require the existence of any moral turpitude. Rather, the focus is an unconscionability. What is in contemplation is conduct such that it would be against conscience to seek exclusion in the circumstances.

In the instant case, I have concluded that what has occurred has been a knowing acquiescence, by the first defendant, in a course of conduct orchestrated by the second defendant, to achieve the personal aims of the latter, without regard to the interests of the Trust or the beneficiaries. It is one which, inevitably, would have the effect of substantially, if not wholly, wasting the Trust assets in satisfying a massive liability for costs of litigation, embarked upon without judicial sanction. Alternatively, at best, it was conduct exhibiting a reckless indifference to whether or not what was being done was contrary to the interests of all the beneficiaries.

On any view, the conduct of the first defendant was, in the circumstances, unconscionable; and exhibited dishonesty in the equitable sense, of a degree which rendered the exclusion provisions of Clause 9 of the deed of trust inapplicable.

Therefore, this is not a situation to which Clause 9, in terms, attaches.

For the sake of completeness, I should record that I agree with the contention of Mr Keen that the same result as to the liability of the second defendant is necessarily arrived at by a secondary route.

Relevantly, s 233 (1) of the Corporations Law stipulates that where a body corporate which was acting, or purporting to act, in the capacity of trustee of a trust, incurs a liability; that body corporate is, for any reason, not entitled to be fully indemnified out of the assets of the trust in respect of the liability; and the body corporate has not discharged, and is unable to discharge, the liability, or a part of it; the body corporate and the persons who were directors of it when the liability was incurred and were not innocent directors in relation to the incurring of the liability, are jointly and severally liable to discharge the liability, or the un-discharged part of it, as the case may be.

Even if it be considered that, in the circumstances of this case, it was not appropriate to make an order for costs direct against the second defendant, as above contemplated, then the proper order would be that the whole costs of the proceedings, on an indemnity basis, be paid by the first defendant without recourse to the assets of the Trust. (In re Beddoe Downes v Cottam [1893] 1 Ch 547 at 562; Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201 at 212).

For reasons already identified, it must be said that the actions of the first defendant in the course of this litigation were not only not directed to towards the benefit of the Trust, but also, were not reasonably and honestly pursued. They were pursued for the purposes of giving effect to the separate agenda of the second defendant.

Given that the information before me indicates that the first defendant has no apparent separate assets to which it is beneficially entitled, then it would seem inevitable that the second defendant would have to be held jointly and severally liable for the costs (including the costs ordered to be paid by the Full Court in its decision of 13 August 1999), by virtue of s 233 (1).

In so concluding, I by no means ignore certain specific contentions which have been advanced, by the second defendant and the first interveners respectively.

I understand the first interveners to seek to contend that, even if this be so, the plaintiff cannot derive comfort from s 233(1), because that section applies only for the benefit of a creditor of the relevant trust and not a beneficiary; and, further, because it applies only with respect to liabilities incurred in breach of trust - not liabilities for breach of trust.

In that regard, it relied upon the authority of Young & Ors v Murphy & Anor (1994) 13 ACSR 722 ("Young"). Particular reference was made to the reasoning of Phillips J, where he argued that the statutory definition of liability in s 233 rendered it apparent that the focus of the section was on true, crystallised debts incurred by a trustee; and not a liability of a trustee to pay damages or equitable compensation for breach of trust.

With respect, I have no quarrel with that reasoning. However, it seems to me that the first interveners seek to extend the concept to the circumstances of the present case in a quite impermissible manner.

What is, potentially, here in issue is a true debt - a liability to pay the costs of the proceedings incurred by the trustee. This is not a situation in which the relevant liability comprises damages for breach of trust. What is in contemplation is the incurring of a specific liability which is the direct product of inappropriate conduct of the trustee, such as to disentitle it from a right of indemnity out of the assets of the Trust, in circumstances where it is apparent that the trustee is a corporate entity with no apparent separate assets of substance.

It is clear that, even if liability is not to be attached directly to the second defendant for the general costs of the action, the situation plainly meets the test of s 233. The first defendant would, in those circumstances, have incurred, within Australia, a true debt, liability or obligation while acting in the capacity of a trust. It has been held not entitled to be fully indemnified in respect of that debt, liability or obligation out of the assets of the Trust. It appears, on the balance of probabilities, that it is unable to discharge the liability for costs. The second defendant is not an "innocent director" in the relevant sense.

In those circumstances there is simply no substance in the argument put forward.

This is a far cry from the circumstances under consideration in Young, which essentially focused on the impeachment, on behalf of beneficiaries, of a trustee for alleged breach of trust and a liability for damages in respect of such breach. Young is simply not relevant to the instant case.

A very substantial liability has been incurred, within these proceedings, by way of fees incurred in relation to the work performed by the inspector. Indeed, it was the inspector's report which identified many of the detailed aspects of the maladministration of the relevant trust. It also demonstrated the impropriety of the transactions which had been entered into, prima facie, for the benefit of entities controlled by the second defendant, even given the assertions of the second defendant that they were really intended to protect the Trust assets. At this point, an order has been made for the payment of the inspector's fees from the assets of the trust, in the first instance.

Having regard to the circumstances in which the inspector was appointed and the resistance to such appointment, which was clearly engineered by the second defendant, I am of opinion that it is quite inappropriate that the Trust ought to bear such a cost in the long-term.

The order which I made on 15 November 1999 was simply an interim direction that the fees and costs of the inspector be paid, in the first instance, out of the net proceeds of the sale of the Kent town property, the main asset of the Trust. I specifically directed that this was to be without prejudice to the issue of how the ultimate liability for such costs ought to be borne.

It seems to me that the proper course is for me to order, pursuant to the provisions of s 84C of the Trustee Act, that payment of the whole of the costs of the investigation be the primary liability of the plaintiff, to the exoneration of the Trust assets, but upon the footing that such costs shall be allowed to the plaintiff on taxation of his legal costs, as a proper disbursement by him in the conduct of the action. The practical effect of such an order will be that the ultimate liability for the fees and expenses of the inspector is to be borne by the second defendant.

I next turn to the situation of the interveners.

The first interveners have not made any claim for costs, nor is any order for costs sought against them.

However, the second intervener does seek an appropriate order, in the sum of $2600, for his costs of representation. It is to be noted that the second intervener is a potential beneficiary in the trust. He is not sui juris, because he suffers from mental and physical infirmities. His affairs are managed by State Trustees, Victoria.

I agree with the submission of his counsel that he did not unilaterally seek to be involved in the proceedings; and that it was necessary that he be represented, to enable all proper parties to be before the court. His attitude has, at all times, been one of refreshing reasonableness and co-operation. His counsel has, consistently, expressed a desire to assist in the fair resolution of the issues now before me. He should receive his costs. I regard the sum of $2600 claimed as being a not unreasonable quantum.

The only reason why it became necessary for the second intervener to be represented before the court was as a consequence of the intransigent attitude of the defendants. I fail to see why the trust assets should be reduced by the cost of his representation in those circumstances. The appropriate order is that the second defendant pay the sum of $2600 to the second intervener, for his costs of and incidental to these proceedings.

There is one final point to be made. In the course of his written submissions, Mr Ross-Smith advanced various criticisms of the conduct of the plaintiff within these proceedings. In effect, he argued that certain costs had needlessly been incurred (see paragraphs 19 to 23 inclusive of outline submission for the first defendant). The short riposte to these suggestions is that I do not accept the validity of most of them, particularly those related to what are said to be irrelevant and/or expansive and exaggerated facts and allegations. It was necessary for the plaintiff, adequately, to spell out the relevant background facts and circumstances. As the proceedings unfolded it was, in reality, the second defendant who sought to vilify the plaintiff by making a vast array of assertions against him.

To the extent that it could fairly be said that there was any undue delay or costs relating to belated amendments, that is a matter which may, adequately, be taken up with the taxing officer on taxation.

In summary then, the formal orders which I am constrained to make in this matter are as follows:-

1. That the second defendant pay to the plaintiff his costs of and incidental to these proceedings (including those related to the present issue as to costs), not otherwise provided for, by a separate order of the court against him herein, to be taxed on the basis of an indemnity in respect of such costs;

2. That the second defendant do further pay to the plaintiff the costs of the appeal which came before the Full Court on 6 March 1997, in discharge and to the exoneration of the primary liability of the first defendant in that regard;

3. That the costs, fees and expenses of and incidental to the investigation and reports by the Inspector appointed herein pursuant to s 84C of the Trustee Act be the primary liability of the plaintiff, to the exoneration of the Trust assets, but upon the footing that such costs, fees and expenses shall be allowed to the plaintiff as a proper disbursement on taxation of the costs referred to in paragraph 1 hereof;

4. That the second defendant pay to the second intervener $2600 for the costs of the second intervener of and incidental to its participation in these proceedings.

6. That further consideration of the action be adjourned.

POPE v DRP NOMINEES PTY LTD & ANOR (No 2) No. SCGRG-96-1003 [2000] SASC 65 (24 March 2000)

Corporations Law s 221(3), s 233, s 233(1);
Trustee Act 1936 s 84C, s 84D;
Supreme Court Rules r 101.01(2);
The Exclusion of Liability for Trustee Fraud (1998) 6 APLJ 41 GE Dal Pont, referred to.
Gava & Anor v Grljusich & Anor (Kennedy J, WASC, 22 February 1996, unreported);
Vestris & Anor v Cashman & Anor (1998-99) 72 SASR 449;
Knight v FP Special Assets Limited (1992) 174 CLR 178;
Re Talk Finance & Insurance Services Pty Ltd (1994) 1 Qd R 558;
In re Beddoe, Downes v Cottam [1893] 1 Ch 547;
Adsett v Berlouis & Ors [1992] FCA 368; (1992) 37 FCR 201;
In the Will of Thomas Field. The Ballarat Trustees, Executors and Agency Co Ltd v Field & Ors [1930] ArgusLawRp 82; [1931] VLR 37, applied.
Young & Ors v Murphy & Anor (1994) 13 ACSR 722, distinguished.
Pope v DRP Nominees Pty Ltd & Anor (Olsson J, 5 November 1998, S6933, unreported);
Rouse & Ors v IOOF Australia Trustees Limited (No 3) [1999] SASC 208;
In re Jones. Christmas v Jones [1897] 2 Ch 190;
Armitage v Nurse & Ors [1997] EWCA Civ 1279; [1997] 2 All ER 705;
Honey v McLennan & Ors [1996-1997] 18 WAR;
Applegate v Moss [1971] 1 QB 406, discussed.
Adelaide Congregation of Jehovah's Witnesses v Pegasus Leasing Ltd & Anor (No 2) (Olsson J, 24 December 1996, S5968, unreported);
Miller v Cameron & Ors [1936] HCA 13; (1935-36) 54 CLR 572;
Perkins v Williams (1905) 22 WN 107;
Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965;
Oz B & S Pty Ltd v Elders IXL Ltd [1993] FCA 371; (1993) 117 ALR 128;
National Trustees Executors & Agency Company of Australasia Limited & Anor v Barnes & Ors [1941] HCA 3; (1940-41) 64 CLR 268;
Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537, considered.

POPE v DRP NOMINEES PTY LTD & ANOR

At a glance

Court

Decision date

Before

Source

Judgment (168 paragraphs)

Parties

Cases Cited (6)

POPE v DRP NOMINEES PTY LTD & ANOR (No 2) No. SCGRG-96-1003 [2000] SASC 65 (24 March 2000)