Re Rosewood Research Pty Ltd (No.2) [2014] NSWSC 1226

Re Rosewood Research Pty Ltd (No.2) [2014] NSWSC 1226 | Case summary | Zoe

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Judicial advice 4In support of the application for further judicial advice, the Trustees provided the Court with a Supplementary Statement of Facts dated 14 July 2014 (which contains submissions concerning the advice sought), a Confidential Opinion dated 8 July 2014, and draft defences to the allegations contained in Part 3 of the Further Amended Statement of Claim (and also Part 3 of a proposed Second Further Amended Statement of Claim). The Court also received further written submissions of the Trustees dated 21 July 2014, 5 August 2014 and 21 August 2014. 5In essence, the Trustees submit that they would be justified in defending some of the allegations in Part 3 of the Further Amended Statement of Claim (and Part 3 of the proposed Second Further Amended Statement of Claim), but would not be justified in defending the allegations in Part 4 of the Further Amended Statement of Claim (and Part 4 of the proposed Second Further Amended Statement of Claim). 6The allegations contained in Part 3 that the Trustees say they are justified in defending are described in the Supplementary Statement of Facts as allegations 1, 2, 3, 4 and 6. These allegations are described by reference to paragraphs in the pleadings. The Trustees submit that those allegations should be defended, but only to the extent that they involve the interpretation and application of the constituent documents of the trusts the subject of the proceedings. 7In relation to the proposed defence to Part 3, the Trustees submit that it is appropriate for them: (1)to adhere to the terms of the draft Defence to the Part 2 allegations; (2)to contest the Part 3 allegations, to the extent that they involve essentially the same issues as those involved in the allegations in Part 2 of the Further Amended Statement of Claim; (3)not to plead to a factual allegation in Part 3 where the draft Defence to Part 2 does not provide a sufficient basis for a proper admission or traverse of the allegation. This is said to be appropriate as it avoids the need to rely on instructions from one or other of the Directors where there is an apparently substantial conflict of interest; and (4)not to plead to matters that apparently involve allegations of personal misconduct by the Directors that are not directly related to the terms of the trusts. 8As to Part 4, the Trustees submit that "the allegations only involve the basis for personal compensatory and restitutionary claims against the Directors", and because of the nature of the claims and the conflict of interest facing the Directors, it is not appropriate for the Trustees to contest those allegations. 9The Trustees propose to seek dispensation from the rules so as to permit them to not plead to numerous allegations, and not have to verify their defences. The Trustees accepted that it was appropriate that those matters be dealt with in the main proceedings. 10The Court also received written submissions for the Attorney-General (dated 18 August 2014), and written submissions for the Objectors (dated 13 August 2014) on the judicial advice application. 11The written submissions of all parties were elaborated upon, and the Court was taken to further documentary material, during the course of the hearing that took place on 22 August 2014. The Court was closed for part of the hearing to facilitate discussion with counsel for the Trustees on issues arising from the Confidential Opinion. 12The Attorney-General neither consented to nor opposed the giving of advice as sought by the Trustees. The Attorney-General did, however, submit that the application was premature, in view of the likely appointment of a receiver in respect of the assets of the Trustees, and the possibility that the issues raised by Part 2 might be dealt with as separate issues in the main proceedings. It was suggested that the hearing of the judicial advice application might be deferred. The Objectors supported that suggestion, submitting that the utility of the hearing was questionable in circumstances where there was no certainty as to what attitude a receiver may take to the issues. 13I gathered from what I was told from the Bar table that it is likely that a receiver will be appointed. That application (brought by the Trustees) has been adjourned to 26 September 2014. However, the possibility that a receiver might take a different view as to the defence by the Trustees of Parts 3 and 4 did not seem to me to warrant a postponement of the hearing, given that such postponement would undoubtedly result in a considerable waste of costs. The hearing therefore proceeded. 14The Objectors opposed the giving of advice as sought by the Trustees. They advanced five reasons. In summary, these are: (1)that the Trustees cannot demonstrate sufficient prospects of success by reference to the factors stated in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [162] (the "Macedonian Church" case); (2)that the Directors are the real contradictors of the allegations in Part 3; (3)that the first plaintiff is insolvent, such that there is no utility in it defending Part 3; (4)that the Trustees have, in respect of their taxation affairs, failed in their obligations of disclosure to the Court; and (5)that the Trustees' proposed defence of Part 3 is predicated on obtaining in this application an order dispensing with the requirement that they verify their defences, and such an order cannot be made in this application. 15In the joint judgment in the Macedonian Church case, their Honours set out (at [162]) a passage from the judgment of Palmer J at first instance, in which his Honour referred to what the Court does when dealing with a judicial advice application in which the trustee asks whether it is justified in prosecuting or defending litigation. Palmer J had stated: "In a judicial advice application in which the trustee asks whether it is justified in prosecuting or defending litigation, all the Court does is to reach a view as to whether the Opinion of Counsel satisfies it that there are sufficient prospects of success to warrant the trustee in proceeding with the litigation. Counsels' Opinion must address the facts necessary to support the legal conclusions reached and must demonstrate that the propositions of law relied upon for those conclusions are properly arguable. Whether, in the light of Counsels' Opinion, there are 'sufficient' prospects of success calls for another judgment founded upon such considerations as: - the nature of the case and the issues raised; - the amounts involved, including likely costs; - whether the likely costs to be incurred by the trustee are proportionate to the issues and [the] significance of the case; - the consequences of the litigation to the parties concerned; - in the case of a charitable trust, any relevant public interest factors." 16The above passage was cited by the High Court in the context of dealing with a submission that Palmer J had committed an error by failing to form a view of the strength of the trustee's defence to certain claims. It had been submitted that it was not enough to merely conclude that there were "sufficient prospects of success" to warrant a defence. 17There was no hint of disapproval of any aspect of Palmer J's statement, but I do not think that the High Court, by its reference to the passage, was intending to state that in all cases where a trustee seeks advice as to whether it should defend proceedings, it is essential that the opinion of counsel must satisfy the requirements suggested by Palmer J, and the Court reach a view, based upon the considerations identified by Palmer J, that there are sufficient prospects of success to warrant the Trustee proceeding to defend. 18Undoubtedly, the matters referred to by Palmer J are relevant matters to consider in such a case. Nonetheless, it would be a mistake to read his statement as if it prescribed the manner in which the power to give advice under s 63 of the Trustee Act 1925 (NSW) is to be exercised in all such cases. As was stated in the joint judgment in the Macedonian Church case at [59] (and see also Kiefel J at [196]) the discretion to give advice under s 63 is confined only by the subject matter, scope and purpose of the legislation. It is clear, however, that the interests of the trust estate is always of cardinal significance (see the Macedonian Church case at [104], [105], [107], [125], [196] and [197]). 19In any event, having regard to the nature of the claims made in the main proceedings, and the contents of the opinions of counsel (dated 23 August 2013 and 8 July 2014), I am satisfied that the Trustees have sufficient prospects of successfully defending, not only the allegations in Part 2, but also the allegations in Part 3 to the extent that they involve issues concerning the nature, terms and objects of the trusts and the scope of proper trust activities, to warrant the Trustees defending the proceedings in the manner proposed. 20I remain of the view, stated in Re Rosewood Research Pty Ltd (supra) at [36], that it is in the interests of the trusts and the public more generally for the Trustees to take an active role in the main proceedings in relation to such issues. Moreover, it seems to me that, in various ways, allegations 1, 2, 3, 4 and 6 do involve such issues to at least some extent. The presence of those issues in both Part 2 and to some extent in Part 3 means that it cannot be said in this case that all that is at stake in the proceedings is the personal position of the Trustees (see Macedonian Church case at [166]). In circumstances where the Trustees will play an active role in relation to those issues where they arise in Part 2, it is in my view sensible (and beneficial to the resolution of questions as to whether the trusts have been properly executed) for the Trustees to also play an active role to the extent that such issues arise in Part 3. 21I recognise that in so extending the involvement of the Trustees some additional cost will be incurred. The likely extent of that additional cost is not clear. Nonetheless, as a matter of principle, there is benefit to be gained from that extension, and the terms of the advice sought are expressly limited to the Trustees having recourse to the trust assets for their reasonable costs. 22The fact that the Trustees do not seek to defend all of the allegations in Part 3 does not necessarily mean that there is no sufficient prospect of success to warrant the Trustees proceeding to defend. The burden of facing those allegations will fall on the Directors, who may well have good defences; but even if they do not, the point remains that the presence of the Trustees will tend to aid the efficient determination of the issues concerning the nature of the trusts and the scope of proper trust activities. That would be the case regardless of the ultimate outcome of the question whether the Trustees should be removed. 23I do not think that the presence of the Directors as parties and as natural contradictors leads to any different view. The Directors will presumably perform a role as contradictor in relation to the allegations in Part 3 the Trustees seek to defend, but the interests of the Directors (who are represented separately from the Trustees in the main proceedings) do not necessarily coincide with those of the Trustees. Of course, that circumstance itself raises practical issues for the Trustees in the running of the main proceedings. The matter of verification of pleadings is but one illustration. These practical issues (which are not uncommon) will need to be managed. I do not see them as a reason to decline to give the Trustees advice that they would be justified in defending aspects of Part 3. 24The Objectors based their submission as to the insolvency of the first plaintiff upon some taxation assessments that have recently been issued to the first plaintiff in a total amount which exceeds $7 million. It was submitted that in circumstances where the first plaintiff was insolvent, there was no utility in giving it advice that it would be justified in defending aspects of Part 3. 25I do not accept that the first plaintiff is insolvent as alleged. The limited material placed before the Court provides no firm foundation for such a conclusion. The Statement of Facts indicates that valuable real property is held amongst the plaintiffs, including by the second plaintiff as trustee of a unit trust of which the first plaintiff is the sole unit holder. I would add that a judicial advice hearing is not an appropriate occasion upon which to conduct a detailed inquiry about solvency, and no such enquiry was attempted. In these circumstances, I do not consider that the financial position of the first plaintiff affords any reason to decline to give the advice sought. 26I also do not think that the failure of the Trustees to provide the Court with certain information about their taxation affairs amounts to a failure to discharge their obligation of disclosure. 27The Objectors submitted that the information was material to what has been described as allegation 8, which is contained within Part 3 of the Further Amended Statement of Claim at paragraphs 89B to 89I. Broadly, these paragraphs allege that by reason of certain conduct of the Trustees, they lost their eligibility for a number of exemptions from taxation. It was submitted that, from about 11 November 2013, there was a failure on the part of the Trustees to disclose information that suggested that, following an audit conducted by the Australian Taxation Office, it was likely that such exemptions would be assessed as not available, with the result that significant taxation assessments would issue against the Trustees. It was further submitted that the failure to disclose deprived the Court, the Objectors and the Attorney-General of the opportunity to consider, before the judgment was handed down on 17 April 2014, whether the judicial advice authorising the Trustees to obtain an opinion on defending Parts 3 and 4 should be refused on further grounds. It was put that judicial advice could have been refused on the basis that allegation 8 had insufficient prospects of being defended and that the first plaintiff was likely to become insolvent if the foreshadowed taxation liabilities materialised. 28In my opinion, the information was not of sufficient materiality to the judicial advice the subject of the 17 April 2014 reasons to require it to be disclosed by that time. The only advice then being sought in relation to Part 3 was whether the Trustees would be justified in obtaining an opinion as to whether they are justified in defending Parts 3 and 4 of the Further Amended Statement of Claim. I fail to see how the information would materially bear upon the question whether the Trustees would be justified in obtaining such an opinion. 29I also do not consider that the Trustees were obliged to bring the information to the attention of the Court in relation to the advice now being sought. The Trustees do not seek advice that they would be justified in defending allegation 8. Even if it is assumed that the information shows that allegation 8 may be difficult for the Directors to defend, the materiality of the information to the advice the Trustees seek is not sufficient to require the Trustees to disclose it. I reject the suggestion made by the Objectors that the failure of the Trustees to disclose it means that the Court should not be satisfied that the Trustees would, in the interests of the trusts, conduct a proper defence of Part 3, and safely expend trust funds in doing so. 30The Objectors are correct to state that the Trustees propose that they not be required to verify their defences in the main proceedings. They are also correct to state that the giving of such dispensation is a matter to be dealt with in those proceedings rather than on the present application. As mentioned earlier, the Trustees accept that position. Nevertheless, I do not consider that these circumstances constitute a reason to refuse to give the advice sought, particularly as it was not suggested that such dispensation was in any way inappropriate, or unlikely to be granted. 31In all the circumstances, and having considered the material placed before the Court, I propose to advise the Trustees that they are justified in defending the claims made in the main proceedings as set forth in Parts 3 and 4 to the extent of defending allegations 1, 2, 3, 4 and 6 insofar as such allegations involve the interpretation and application of the constituent documents of the trusts the subject of the proceedings. 32The Court will further advise the Trustees that they are justified in having recourse to the trust funds to pay their reasonable costs of so defending those allegations.

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Costs 33It remains necessary for the Court to deal with various issues concerning the costs of these proceedings, including the issues raised by the two Notices of Motion that were filed on 6 December 2013. The hearing and determination of these matters had earlier been deferred by agreement (see Re Rosewood Research Pty Ltd (supra) at [47] and [64]). In relation to these matters, the Court received written submissions from the Trustees (dated 29 July 2014, 19 August 2014 and 21 August 2014), the Attorney-General (dated 11 August 2014), the Objectors (dated 6 August 2014) and the Directors (dated 22 August 2014). Again, the written submissions were elaborated upon, and the Court was taken to further documentary material, during the hearing. 34The Trustees seek an order that they be permitted to recover their costs of the proceedings out of the trust assets, although this position is qualified by the acceptance that, as a general principle, the Trustees should not be allowed costs they incurred unreasonably. The Trustees concede that such a description could be applied to costs related to establishing the correct position in relation to "past costs". 35"Past costs" is a reference to an issue that emerged in the course of the proceedings, and which is mentioned in Re Rosewood Research Pty Ltd (supra) (at [12]). In short, it is the issue surrounding the disclosure on 18 September 2013 of the fact that the Trustees had already been paid $92,752.01 out of the trust funds in respect of legal costs. 36As I noted in the earlier judgment, the emergence of the issue caused considerable delay and disruption to the proceedings. The Trustees were required to provide details of these costs. Consent orders were then made on 17 October 2013 that provided, inter alia, for submissions to be made on the issue. The issue was one of the reasons why the matter was relisted for directions on 9 December 2013. 37On that occasion, Mr Meek SC and Mr Barlin of counsel (who had earlier appeared for the Trustees) appeared in their own right and, in accordance with their perceived obligations under the Bar Rules, made a statement to the Court in these terms: "In relation to the aspect of the various Statements of Fact which sought judicial advice to the effect that the trustee would be justified in having recourse to trust assets for the purposes of paying its reasonable legal costs and disbursements incurred in corresponding with Prolegis and the Crown Solicitors, following the claim and following the service of a letter of demand on 7 February 2013 and in defending themselves in the main proceedings commenced pursuant to the claim, the various Statements of Fact did not in our view clearly indicate that a portion of those costs had already been paid out of trust funds and to the extent that the Court in making consent orders which were made on 12 July 2013 proceeded on an understanding, that was not the case. That position in our view should be corrected." 38A direction was made by the Court on 9 December 2013 requiring the Trustees to provide further details in relation to the "past costs". 39In the meantime, both the Attorney-General and the Objectors filed their Notices of Motion. Save for an issue raised by the Objectors (concerning the implied undertaking in respect of certain documents provided to them by the Trustees), the orders sought were in substantially the same terms. Orders were sought: (1)That order 2(b) made by Pembroke J on 12 July 2013 in these proceedings be revoked. (2)That the Trustees pay, on an indemnity basis, the applicant's costs (up to 12 July 2013 in the case of the Objectors and up to 20 September 2013 in the case of the Attorney-General) relating to the claim for judicial advice in certain paragraphs of various versions of the Statement of Facts. These paragraphs were in the following terms (or in similar terms to the same effect): "Whether [the Trustees] are justified in having recourse to the trust assets ... for the purposes of paying its reasonable legal costs and disbursements incurred ... regarding: (i) corresponding with Prolegis and the Crown Solicitor regarding the Claim including correspondence regarding whether they are trustees of a charitable trust, identifying the terms of the trust and work performed on the question of the authorisation for the Main Proceedings; [...]" (3)That the Trustees not be indemnified out of the trust assets in respect of such costs. (4)That pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW) or alternatively s 197(1) of the Corporations Act 2001 (Cth), the three Directors of the Trustees also pay those costs on an indemnity basis. (5)That such costs be payable forthwith. 40In addition to the relief sought by their Notice of Motion, the Objectors sought an order that their costs of the judicial advice proceedings be paid out of the trust funds. That order was sought regardless of whether the Objectors were successful in persuading the Court not to give judicial advice as sought. The Objectors submitted that they should have their costs in any event, conformably with what was described as the principle in Re Perrot Mill Pty Ltd (No.2) [2013] VSC 428. It was submitted that the Objectors had at every stage raised matters which should have been brought to the attention of the Court, and those matters led to issues being canvassed that should have been canvassed. That order was opposed, not only by the Trustees, but also by the Attorney-General. 41It is convenient to deal first with the costs orders sought in the Notices of Motion. 42Order 2(b) made by Pembroke J on 12 July 2013, by consent, provided: "2. The plaintiffs would be justified in having recourse to the Trust assets [...] for the purposes of paying: [...] (b) the costs of these proceedings up to and including 12 July 2013, except costs of or incidental to Confidential Schedule 1 or Confidential Schedule 4 to the Statements of Facts as revised from time to time, but without prejudice to any later application by the Plaintiffs regarding such costs;" 43The Attorney-General submitted that order 2(b) was made on a false understanding in that it was based upon successive Statements of Facts that had failed to disclose that $92,752.01 had already been paid by the Trustees out of trust funds. It was submitted that the order must be "corrected" and should not be left standing as to do so would have the effect that the Trustees have obtained judicial advice of a retrospective nature in respect of past conduct. It is implicit in that submission that order 2(b) would apply in its terms to a payment of costs that had already been made. 44The Objectors submitted that the Court had power to revoke the order under s 63(2) of the Trustee Act where there was a misrepresentation by an applicant in obtaining judicial advice (see the Macedonian Church case at [94]). It was then submitted that it was appropriate to revoke the order because, had the true position been known, there would have been no legitimate basis to seek judicial advice in relation to costs incurred prior to the commencement of the judicial advice proceedings. 45The Trustees submitted, in effect, that whilst it was true that there had been no explicit disclosure that $92,752.01 had been paid out of trust funds, versions of the Statements of Facts revealed that at least "a substantial portion" of the total costs that had been incurred had already been paid. It was further submitted that the subject matter of order 2(b) was the costs of the judicial advice proceedings themselves, rather than any costs incurred (including the $92,752.01) prior to the commencement of those proceedings. In addition, it was submitted that the Statements of Facts clearly identified the costs in respect of which judicial advice was sought, and that the $92,752.01 was not included in those costs. It was emphasised that the submissions of the Objectors and the Attorney-General rested upon the fallacy that the $92,752.01 (which counsel for the Trustees called the "paid costs") constituted the entirety of the "past costs" about which advice was sought. 46Whilst I accept that, at the time order 2(b) was made, the Attorney-General and the Objectors were not aware that $92,752.01 had already been paid to the Trustees out of trust funds, I do not think that grounds have been established for the revocation of the order. It is true that the information concerning costs provided by the Trustees prior to 12 July 2013 was incomplete and might, depending upon the circumstances, be regarded as misleading. However, I do not think that it can be said that the Trustees were guilty of any wilful concealment or misrepresentation within the meaning of s 63(2) of the Trustee Act in obtaining order 2(b). Information had been provided which indicated that some costs had already been paid. The information was provided in a context where the judicial advice sought concerned the question whether the Trustees are justified in having recourse to trust funds to pay costs not yet paid (not whether they were in the past justified in having such recourse to pay costs). 47In addition, any misapprehension as to the true position concerning the payment of costs incurred prior to the commencement of the judicial advice proceedings cannot be seen as central to order 2(b), the subject matter of which is entirely different. Moreover, it is not the case that had the true position been known about the $92,752.01, there would have been no basis to seek judicial advice about costs incurred prior to the commencement of the judicial advice proceedings. A substantial amount of such costs were in fact unpaid. In these circumstances, I decline to revoke order 2(b) made on 12 July 2013. 48I turn now to consider the claims for costs orders against the Trustees and the Directors. In essence, these claims are based upon the proposition that the failure of the Trustees, prior to 18 September 2013, to disclose the fact that $92,752.01 had already been paid out of trust funds, brought about a wastage of all of the costs of one aspect of the judicial advice proceedings. That aspect, as identified in the Notices of Motion, was the question whether the Trustees would be justified in having recourse to the trust assets to pay legal costs incurred in corresponding with the solicitors for the Objectors and the Crown Solicitor about certain issues prior to the commencement of the judicial advice proceedings. It was submitted that when the Trustees informed the Court on 20 September 2013 that it was not seeking judicial advice in relation to the $92,752.01, the costs that had hitherto been devoted to the issue were rendered useless. 49I do not think that the clarification concerning the $92,752.01 had that consequence. It is not at all clear that the $92,752.01 was ever the subject of the judicial advice application, but even if it was, its removal did not cause all of the costs of the issue to be wasted. The issue concerned costs incurred by the Trustees in undertaking various activities prior to the commencement of the judicial advice proceedings. Those costs clearly included costs that had not yet been paid. Those costs were not insubstantial. Questions were raised in that context as to whether the Court had jurisdiction to give advice in respect of conduct occurring prior to the commencement of the proceedings, and as to whether, as a matter of discretion, the Court should give advice that the Trustees would be justified in having recourse to the trust funds to pay costs incurred in undertaking such conduct. Those questions remained live throughout the proceedings, and formed part of the consideration given to Questions 1 and 4 (see Re Rosewood Research Pty Ltd (supra) at [14], [15], [19], [20], [21], [43], [44] and [45]). 50The Objectors pointed to the fact that during the course of the proceedings, the Trustees narrowed the scope of the advice sought in respect of their legal costs. Initially, the Trustees sought advice in respect of costs incurred from 7 February 2013, but later sought advice only in respect of costs incurred from 21 March 2013 (see Re Rosewood Research Pty Ltd (supra) at [44]). Despite that narrowing, the Court was always concerned with whether the Trustees would be justified in having recourse to trust funds to pay costs incurred prior to the commencement of the judicial advice proceedings in May 2013. 51It became apparent during the course of submissions that the Objectors and the Attorney-General were not able to make good their contentions that the whole (or even a substantial part) of the costs of the issue identified in their motions had been wasted. It appeared that, at best, some work done analysing the (incomplete) information the Trustees had provided about their costs may have been wasted. Some particular paragraphs of written submissions were pointed to as illustrations, and the possibility of amending the motion to narrow its ambit was alluded to by counsel for the Objectors. 52Nevertheless, in circumstances where the Trustees have, by and large, been successful in obtaining advice from the Court, and it has not been shown that the inadequate disclosure in relation to the $92,752.01 was the result of any deliberate or reckless conduct on the part of the Trustees or their advisers, I would be most reluctant to make a particular costs order against the Trustees in respect of some part of one issue upon which they were broadly successful, merely because it could be shown that some costs were wasted as a result of a default on the part of the Trustees. 53For these reasons, I am not persuaded that it is appropriate, in the exercise of the Court's discretion in relation to costs, to make any order for costs against the Trustees in favour of either the Attorney-General or the Objectors on the grounds they have advanced. 54It follows from the above that it would not be appropriate to make the costs orders sought against the Directors. The suggested foundation for liability under s 197 of the Corporations Act, namely, that the corporation incurs a liability to pay the costs of the applicant, falls away, as does any basis for an order against the directors under s 98(1) of the Civil Procedure Act. I did not understand either the Attorney-General or the Objectors to submit that if the Trustees were not ordered to pay the costs sought, the Directors might nonetheless be ordered to pay them. 55In any case, the Directors were only participants in these proceedings by virtue of being named as respondents to the two motions. The Directors are properly regarded as "non-parties" for the purposes of determining costs orders. It was contended that costs orders should be made against the Directors because at least the first plaintiff was insolvent, the Directors stood to benefit from the judicial advice proceedings, and they ultimately had responsibility for the Trustees' conduct of the proceedings. 56However, it is my view that where insolvency has not been demonstrated, and the conduct of the proceedings by the Trustees has not been shown to warrant the making of the costs orders sought against them, the costs orders sought against the Directors should not be made either. 57The remaining aspect of the motions is the order sought by the Objectors that they be released from the implied undertaking attaching to certain documents served on or provided to them in these proceedings by the Trustees. The release is sought so as to permit the use of the documents in the main proceedings. The documents concerned are those appearing at pages 7 to 26 inclusive and 31 to 39 inclusive of annexure A to the Applicants' Further Submissions dated 21 October 2013. 58This order was not opposed by the Trustees. It seems to me that the documents may be relevant to issues in the main proceedings, and I also agree with the Objectors' submission that it is appropriate that any such order be made in these proceedings, rather than require an application to be made in the main proceedings. Accordingly, an order releasing the implied undertaking will be made in respect of the identified documents. 59Otherwise, the Notices of Motion filed on 6 December 2013 will be dismissed. Costs of the motions should follow the event. The Attorney-General and the Objectors should pay the costs of the Trustees and the Directors in respect of the motions. 60As far as the costs of the proceedings generally are concerned, it seems to me that, subject to one matter, the Trustees should have their costs paid out of the trust funds. The Trustees have succeeded in obtaining judicial advice substantially as sought. The applications were properly brought and, despite the complex issues with which the applications were concerned, the Trustees have, through their legal representatives, endeavoured to focus on the central questions involved. 61The qualification referred to in the preceding paragraph concerns the Trustees' costs of providing information to the Attorney-General and the Objectors in clarification of the position about the $92,752.01. It was unfortunate that such payment of costs out of trust funds was not disclosed at an early stage of these proceedings. I do not think that the trust funds ought to bear the costs of providing belated clarification. The Trustees effectively conceded that point. 62The Attorney-General seeks no order for costs of these proceedings, apart from the orders sought in his Notice of Motion. 63As mentioned earlier, the Objectors seek an order that their costs of the proceedings be paid out of the trust assets. Reliance was placed upon the decision in Re Perrot Mill Pty Ltd (No.2) (supra). In that case, Croft J dealt with an application by a trustee for advice as to whether it would be justified in having recourse to trust assets to pay its reasonable costs of defending proceedings brought against it. The initial hearing had to be adjourned to another day because the trustee had not provided the Court with an opinion of Counsel. At the resumed hearing, Counsel for other parties brought to the attention of the Court a letter, the contents of which, it was submitted, ought to have been disclosed to the Court by the trustee and considered in the opinion of Counsel for the trustee. The hearing was adjourned to yet another day, and Counsel for the trustee was directed to prepare a supplementary opinion dealing with the letter. Croft J agreed (at [7]-[8]) that the letter ought to have been so disclosed and considered. His Honour stated that "the issues now canvassed in relation to the 6 June 2011 letter are matters which should have been canvassed in the Joint Opinion". 64On the issue of costs, Croft J declined to allow the trustee recourse to the trust funds for the costs of the first two days of hearing (see at [11]-[13]). As for the costs of the other parties, Croft J stated at [14]: "In the case of Gallan and Morrison, reasonable costs should be allowed for the 9 August 2013 hearing itself and also for preparation of submissions and supporting materials with respect to that hearing; because, as I have indicated, the issues they raised were quite properly raised, Perrot Mill not having done so." 65The Objectors submit that, on a similar basis, their costs should be paid out of the trust assets. It is put that the Objectors have at every stage of the proceedings "raised matters which should have been brought to the attention of the Court", and this has led to issues being canvassed which should have been canvassed. It was also put that the Trustees failed to provide the Court with complete information. 66The Objectors have brought various matters to the attention of the Court, and have made various criticisms of the material provided to the Court by the Trustees. In my earlier judgment I did not accept the criticisms made of the adequacy of counsel's opinion and the draft Defence based upon it (see Re Rosewood Research Pty Ltd (supra) at [37]). I have already dealt in these reasons with the Objectors' claim of non-disclosure of information about the taxation affairs of the trustees (see at [26]-[29] above), and the Objectors' claim for costs in its Notice of Motion based on the failure to disclose the payment of $92,752.01 (see at [46] above). 67Clearly, the Objectors have had very limited success in showing that the conduct of the Trustees was deficient. I therefore do not think that the position of the Objectors can in any way be seen to be equivalent to the non-trustee parties in Re Perrot Mill Pty Ltd (No.2) (supra) who obtained an order for costs out of the trust assets. 68Moreover, viewing the matter broadly, it seems to me that, throughout the proceedings, the Objectors raised numerous matters and arguments against the giving of advice as sought by the Trustees, and were by and large unsuccessful in that endeavour. 69It should also be noted that, unlike the Attorney-General, it cannot be said of the Objectors that they participated in the proceedings only to represent the public interest. The Objectors were present by dint of their status as the plaintiffs in the main proceedings, in which they seek to be appointed as trustees in place of the Trustees. 70The Objectors chose to take an active role in the proceedings, in circumstances where it was known that the Attorney-General would be a participant, acting in the public interest in accordance with his function as the protector of charitable trusts (see also the Charitable Trusts Act 1993 (NSW)). For whatever reasons, the Objectors appeared to take a decidedly adversarial approach to these proceedings. As their opposition has been largely unsuccessful, I can see no good reason why the Objectors should have their costs paid out of the trust assets. 71Finally, I should note that the adversarial character of these proceedings undoubtedly caused costs to be significantly increased. These proceedings bore a character that was far away from the summary character of the procedure envisaged under s 63 of the Trustee Act (see the Macedonian Church case (supra) at [61]). This is not something that should be encouraged. In cases where a trustee seeks judicial advice as to whether to defend proceedings for breach of trust, the Court should in my view be wary of permitting the complainants to participate. That is particularly so in the case of a charitable trust where the Attorney-General is able to participate in the public interest. 72The orders of the Court will be: (1)Pursuant to s 63 of the Trustee Act 1925, the Court advises the Trustees: (a)that they are justified in defending the claims made in the main proceedings (being proceedings number 2013/152562) as set forth in Parts 3 and 4 of the pleading (being the Statement of Claim and subsequent amended versions of it) to the extent of defending allegations 1, 2, 3, 4 and 6, as described in the Supplementary Statement of Facts dated 14 July 2014, insofar as such allegations involve the interpretation and application of the constituent documents of the trusts the subject of the proceedings; and (b)that they are justified in having recourse to the trust funds to pay their reasonable costs of so defending those allegations. (2)That the Trustees' costs of these proceedings (except for the costs of providing information to the Attorney-General and the Objectors after 20 September 2013 in clarification of the position in relation to the payment of the $92,752.01 out of trust funds) may be paid out of the trust funds. (3)That the Objectors are released from the implied undertaking in respect of the documents appearing at pages 7 to 26 inclusive and 31 to 39 inclusive of annexure A to the Applicants' Further Submissions dated 21 October 2013, to the extent necessary to permit the use of such documents in proceedings number 2013/152562. (4)That the Objectors' Notice of Motion filed on 6 December 2013 is otherwise dismissed. (5)That the Objectors pay the Trustees' costs of the said motion, and the Directors' costs of the said motion. (6)That the Attorney-General's Notice of Motion filed on 6 December 2013 is dismissed. (7)That the Attorney-General pay the Trustees' costs of the said motion, and the Directors' costs of the said motion. (8)That the Objectors' application for their costs to be paid out of the trust funds is refused.

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