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[2026] NSWSC 1149
Supreme Court of NSW
2026-09-22
Parker J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Roberts v Mawabe Pty Ltd (No 2) [2026] NSWSC 1149
Hearing dates: 29 June 2026; 31 July 2026; further written submissions ending 5 August 2026
Date of orders: 22 September 2026
Decision date: 22 September 2026
Jurisdiction: Equity
Before: Parker J
Decision: See [139]
Catchwords: TRUSTS AND TRUSTEES — discretionary family trust — claim for unpaid distributions of trust income framed as debt or money had and received — trustee's admission of unconditional obligation to pay — whether account balances in financial statements bind trustee or beneficiary — effect of payment into jointly held bank account — validity of distribution resolutions — fraud on a power — claim for unadmitted entitlements as "equitable debt" — claim to make good loss to trust estate by equitable compensation — Barnes v Addy — removal of trustee.
CIVIL PROCEDURE — leave to amend statement of claim — futility as ground for refusing leave — limitation defence not to be pre-empted in a statement of claim — reconstitution of proceedings — children removed as plaintiffs and joined as defendants — joinder of Family Law s 79A claim inconvenient — consequential relief sought against trustee not a party to the settlement.
Legislation Cited: Civil Procedure Act 2005, s 56(3)
Family Law Act 1975, s 79A
Limitation Act 1969, ss 14(1)(a), 15, 47-48, 54-55
Cases Cited: Alexander v Ajax Insurance Co Ltd [1956] VLR 436
Baba v Sheehan [2021] NSWCA 58
Fisher v Nemeske Pty Ltd (2016) 257 CLR 615
Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435
Gillespie v Gillespie Cranes Nominees Pty Ltd [2022] NSWSC 1184
Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112
Master Wealth Control Pty Ltd v RP Data Pty Ltd [2025] NSWSC 943
Pardoe v Price (1847) 16 M & W 451
Perez de la Sala v Perez de la Sala (No 5) [2026] NSWSC 556
Roberts v Mawabe Pty Ltd [2025] NSWSC 374
Roxborough v Rothmans of Pall Mall Australia Pty Ltd (2001) 208 CLR 516 at 541
Young v Lalic (2006) 197 FLR 27
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484
Texts Cited: Dyson Heydon, Mark Leeming, Peter G Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (5th ed, 2015, LexisNexis)
Category: Principal judgment
Parties: Main Proceedings:
Margaret Denise Roberts (first plaintiff)
Luke John Waller (second plaintiff)
Zachary Alan Waller (third plaintiff)
Joshua James Waller (fourth plaintiff)
Leigh Declan Waller (fifth plaintiff)
Rebecca Paige Waller (sixth plaintiff)
Mawabe Pty Limited (first defendant)
Bernard Waller (second defendant)
Notice of Motion filed 2 April 2026:
Mawabe Pty Limited (first applicant)
Bernard Waller (second applicant)
Margaret Denise Roberts (first respondent)
Luke John Waller (second respondent)
Zachary Alan Waller (third respondent)
Joshua James Waller (fourth respondent)
Leigh Declan Waller (fifth respondent)
Rebecca Paige Waller (sixth respondent)
Notice of Motion filed 3 August 2026:
Margaret Denise Roberts (applicant)
Mawabe Pty Limited (first respondent)
Bernard Waller (second respondent)
Representation: Counsel:
S Kelly (29 June 2026); A J Greinke (31 July 2026; further written submissions) (plaintiffs)
D Grieve KC (defendants)
Solicitors:
CG Legal Group (plaintiffs)
RBHM Commercial Lawyers (defendants)
File Number(s): 2021/226486
Publication restriction: Nil
Before the Court are interlocutory cross-applications in proceedings which concern the administration of a discretionary family trust. The defendants apply to have the proceedings summarily dismissed. The plaintiffs apply to amend their statement of claim.
The discretionary trust in question is known as the “Waller Family Trust”, and I will refer to it as the “WF Trust”. It was established in 2004 for the benefit of the second defendant, Bernard Waller and the first plaintiff, Margaret Denise Roberts, who at the time were a married couple, and their children.
Mr Waller and Ms Roberts had five children together. For convenience, and without intending any disrespect, I will refer to them, where individual reference is necessary, by their given names. Otherwise I will refer to them collectively as “the Children”. They are currently named as the second to sixth plaintiffs, alongside their mother.
The trustee of the Trust is the first defendant, Mawabe Pty Limited (“Mawabe” or the “Trustee”). At all material times, that company has been controlled, and its affairs directed by Mr Waller. He is the sole shareholder and director.
The proceedings were originally begun in the Supreme Court of Queensland in May 2021. In August 2021, they were transferred to this Court. There have been four versions of the statement of claim. The current one was filed in September 2024. A defence to that statement of claim was filed in November 2024. A reply to the defence to the third version of the statement of claim had previously been filed in November 2023; that reply does not appear to have been updated but presumably should be treated as a reply to the later-filed defence: Master Wealth Control Pty Ltd v RP Data Pty Ltd [2025] NSWSC 943 at [93]-[94] (Meek J).
By the time the defence was filed in November 2024, lengthy affidavits and expert reports had been prepared by the parties, but the evidence was not, or was not necessarily, complete. In December 2024, the proceedings came before Slattery J for argument about case management questions, and in particular the adducing of further expert evidence. His Honour delivered judgment in April 2025, giving directions on this topic: Roberts v Mawabe Pty Ltd [2025] NSWSC 374 (“J1”).
The family background is set out at J1 [7]-[9]:
Ms Roberts and Mr Waller were married in September 1996. He worked as an architect soon after their marriage. Ms Roberts had been working full-time as a teacher until the birth of their first child in 1999. They had five children between 1999 and 2008.
They were divorced in August 2016. Property proceedings under the Family Law Act took place between them, which settled in December 2017 ("the 2017 settlement"). This involved an agreement implemented by consent orders in the Federal Circuit Court of Australia (as it then was known). After his divorce from the plaintiff, Mr Waller remarried Ms Eomji Gu.
Soon after their 1996 marriage, Mr Waller commenced work as an architect with the Sydney architectural firm, Nettleton Tribe, which provides its professional services from business premises located in the North Shore of Sydney. Nettleton Tribe distributes remuneration and profits to its owners and employees through a trust structure comprised of two trusts. The first trust is the “Nettleton Tribe Practice Trust” ("the NTP trust"), the trustee of which is Nettleton Tribe (Partnership) Pty Limited (“the NTP Trustee”). The second trust owns the business premises from which Nettleton Tribe practises. Fathom Investments Pty Limited is trustee of that trust, the Fathom Investment Trust No. 5 ("Fathom 5 Trust"). Mr Waller was a director of the trustee of the NTP trust but not of the Fathom 5 Trust.
The WF Trust was established by deed dated 8 June 2004 (“Trust Deed”). The term “Trustee” was defined as meaning Mawabe, but elsewhere in the Deed the “Trustees” were referred to in the plural. Nothing of course turns on this; it is referred to only to explain the inconsistencies in the passages quoted below from the Deed.
The Deed was conventional in form. The “first corpus beneficiary” was defined as Mr Waller and Ms Roberts. The “second corpus beneficiary” was defined as their children. Other classes of “corpus beneficiary” included grandchildren and other relatives of Mr Waller or Ms Roberts.
The terms on which the assets of the trust were held were set out in cl 5. Relevantly, cl 5(b) provided that the income for each Trust Accounting Year (which corresponded with the financial year) was to be held:
… for such of the [corpus beneficiaries] … as the Trustees shall in their absolute discretion determine in each year and in such proportions among them or to such one or more of them to the exclusion or such other or others as the Trustees may determine AND IT IS HEREBY EXPRESSLY DECLARED that the Trustees shall make their determination pursuant to this clause on or before the last day of the Trust Accounting Year … and in default of determination the income received in the Trust Accounting Year shall be divided equally among such of the first corpus beneficiaries as shall be living on the last day of the Trust Accounting Year …
Clause 14 contained a power to remove existing Trustees and to appoint new or additional Trustees. This power was conferred on the “first corpus beneficiary” and, after the death of the first corpus beneficiary, on the second corpus beneficiary, and so on. For convenience I will refer to the person entitled to exercise this power as the “appointor” under the Trust Deed.
Clause 15 dealt with the amendment of the Trust Deed. It provided:
The Trustee with the consent of [the appointor] shall have power by Deed to alter revoke or add to any of the provisions in this Trust Deed and make new provisions to the exclusion of or in addition to any of the provisions at the time being in force and any such Trust Deed shall be subject in like manner to be altered revoked or added to by a subsequent Deed …
Clause 18 provided that the Trustees’ discretion under cl 5(b) (among others) should “only be capable of exercise by the Trustees with the consent of” the appointor.
At all relevant times, the WF Trust’s principal source of income has been distributions made to it by the NTP Trust and the Fathom 5 Trust, derived through Mr Waller’s work with Nettleton Tribe. I will refer to the NTP Trust and the Fathom 5 Trust collectively as the “NT Trusts”.
Most, but not all, of the WF Trust’s income was paid into a bank account in the name of Mawabe as trustee, which is referred to in the statement of claim as the “Trust Account”. Surplus monies were paid out of the account and appear to have been used to defray personal expenses and liabilities of Mr Waller and Ms Roberts.
Some payments were made directly to creditors of Mr Waller or Ms Roberts from the Trust Account. Other monies (which appear to have been the bulk of them) were paid to accounts held in the joint name of Mr Waller and Ms Roberts which were used for the payment of living expenses for them and the Children. I will refer to these accounts as the “Joint Accounts”.
The plaintiffs’ maladministration claims cover fifteen financial years: from the 2004 financial year to the 2018 financial year. Financial statements for 2009 onwards are referred to in the statement of claim; they were, it seems, prepared by external accountants on Mr Waller’s instructions. Presumably the same was so for 2004 to 2008.
Usually, in discretionary family trusts of the present type, the precise figure for the income derived by the trust is not known at the end of the financial year when the resolution to distribute the income must be made. It is common practice in such cases for the resolution to specify the distributions in terms of a formula. When the figures are later worked out, the distribution amounts so calculated are credited, as at the end of the financial year, to running accounts, styled as “loan” accounts or something similar, in the names of the beneficiaries. Drawings paid out to, or for the benefit of, a beneficiary are debited to that beneficiary’s account.
The statement of claim alleges that the income distributions made from the WF Trust in favour of Mr Waller, Ms Roberts and the Children were recorded in loan accounts of this type in the Trust’s financial statements from 2009 onwards. Presumably the same practice was followed in earlier years.
According to the statement of claim, the income of the WF Trust was, in each financial year from 2004 to 2015, divided among Mr Waller, Ms Roberts and the Children. Nearly all the income was distributed to Mr Waller or Ms Roberts, with Ms Roberts receiving a higher proportion in the earlier years. The distributions made to the Children were relatively small; they were young at the time and the distributions to them were probably fixed, for tax minimisation purposes, by reference to the applicable tax-free threshold.
That within 7 days of the date of these Orders, the parties shall do all such things and sign and execute all such documents as may be necessary to remove the Wife as an appointor and beneficiary of the Waller Family Trust.
That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders, the Registrar of the Court is appointed pursuant to Section 106A, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
The statement of claim alleges that despite these orders, no action has been taken, and no documents have been signed by either Mr Waller or Ms Roberts, to remove Ms Roberts as appointor of the WF Trust, or as one of the beneficiaries. Nor has any application been made to have the Registrar of the FCC execute any such documents.
I return to the procedural history of the present case. Following the directions given by Slattery J in April 2025, further evidence has been filed, but the proceedings have not been fixed for hearing. It seems that they are not ready. There is however no need, for the purposes of this judgment, to go into the causes of the delay.
The defendants’ application for summary dismissal of the proceedings was made by notice of motion filed on 2 April this year. The notice of motion identified two alternative grounds for summary dismissal:
“in the light of” specified passages from the expert report filed on behalf of the plaintiffs in January this year, the plaintiffs’ claim “has no substance and there is no serious issue to be tried”; and
want of prosecution.
The defendants’ motion came on for hearing before me on 29 June. I raised with counsel for the plaintiffs, Mr Kelly, some concerns about the adequacy of the plaintiffs’ statement of claim. After some debate, Mr Kelly accepted that amendments needed to be made and obtained an adjournment to propound a new version of the statement of claim. Directions were made for this to be done by 24 July, and the proceedings were re-listed before me on 31 July.
As I later learned, Mr Kelly did not complete the task of revising the statement of claim, and ultimately returned the brief. On 24 July, a proposed further version of the statement of claim was circulated, settled by new counsel, Dr Greinke.
Counsel for the defendants, Mr Grieve KC, objected to the new pleading on the ground that it did not adequately address the points which had been raised at the hearing on 29 June. He filed a written submission to that effect. Early on the morning of 31 July, Dr Greinke circulated a revised version of the 24 July statement of claim.
The proceedings came back before me, in accordance with the previous direction, on 31 July. Dr Greinke appeared for the plaintiffs. He explained that Mr Kelly had withdrawn from the proceedings and sought an opportunity to present further submissions in support of that morning’s statement of claim. It was agreed that a formal notice of motion would be filed for leave to amend the existing statement of claim, and there would be a further submission from Dr Greinke and a response from counsel for the defendants.
The notice of motion was filed on 3 August. It sought leave to amend the existing statement of claim “substantially in the form” of the 31 July version.
As already noted, the Children are co-plaintiffs with Ms Roberts in the proceedings as currently constituted. At the hearing on 29 June I pointed out to Mr Kelly that the Children did not necessarily have the same interest as Ms Roberts in the proceedings. Indeed, in some respects, their interests conflicted with hers.
Dr Greinke accepts this. The proposed statement of claim seeks to have the Children removed as plaintiffs, and joined as defendants. The contemplation is that they may then be separately represented and, if they so choose, pursue their own maladministration claims concerning the Trust. The proposed statement of claim identifies Ms Roberts as the sole plaintiff and the Children as the third to seventh defendants.
Mr Grieve, in his written submissions, objects to the reconstitution of the proceedings in this way. He argues that there was no justification for any claim by any of the Children. While they could, and should, be removed as plaintiffs, they should be left out of the proceedings entirely.
I certainly agree that there is no reason to assume that all, or indeed any, of the Children have valid claims concerning maladministration of the Trust. Moreover, any claims which they may have would probably be relatively small. It certainly cannot be assumed that, if independent legal advice is provided to them, they will necessarily pursue any such claims.
But I do not agree with Mr Grieve that the Children should be left out of the proceedings entirely. On any view, they remain beneficiaries of the Trust. As will be seen, there are claims for the taking of fresh accounts and the removal of Mawabe as Trustee. The Children are not necessary parties to those claims, but they are proper parties who might wish to be heard, or to cross-claim.
In these circumstances, the proper course is to order that the Children be removed as the second to sixth plaintiffs and joined as the third to seventh defendants. If, having obtained independent advice, they choose not to do so, they may simply enter submitting appearances.
| Year | Ms Roberts | Mr Waller | The Children | Ms Gu | Total | | 2004 | $13,618 | $3,249 | $1,929 | $0 | $18,796 | | 2005 | $14,969 | $3,571 | $1,929 | $0 | $20,469 | | 2006 | $59,278 | $14,141 | $1,929 | $0 | $75,348 | | 2007 | $101,421 | $42,616 | $2,572 | $0 | $146,609 | | 2008 | $141,885 | $72,149 | $6,665 | $0 | $220,699 | | 2009 | $140,849 | $30,000 | $6,665 | $0 | $177,514 | | 2010 | $172,306 | $86,271 | $15,000 | $0 | $273,577 | | 2011 | $501,345 | $16,000 | $16,660 | $0 | $534,005 | | 2012 | $176,946 | $83,895 | $2,080 | $0 | $262,921 | | 2013 | $229,372 | $75,996 | $2,080 | $0 | $307,448 | | 2014 | $260,750 | $191,922 | $2,075 | $0 | $454,747 | | 2015 | $190,563 | $345,647 | $2,075 | $0 | $538,285 | | 2016 | $0 | $785,046 | $2,080 | $0 | $787,126 | | 2017 | $0 | $657,097 | $0 | $0 | $657,097 | | 2018 | $0 | $258,826 | $0 | $180,000 | $438,826 | | Grand Total | $2,003,302 | $2,666,426 | $63,739 | $180,000 | $4,913,467 |
The claims made on behalf of Ms Roberts in the proposed statement of claim can be summarised in six heads of claim. I will deal with the application to amend by reference to those six heads. They are as follows.
Mawabe failed to pay out to Ms Roberts, or at least to pay out to her in full, the distributions of the reported income of the Trust allocated to her for the 2004 to 2015 financial years, and remains liable to account to her the unpaid balance.
Mawabe wrongfully excluded Ms Roberts from distributions of the reported income of the Trust in the 2016, 2017 and 2018 financial years, and remains liable to account to her for a one-half share of that income under the default distribution provision in the Trust Deed. In particular, that provision continued to apply in the 2018 financial year because Ms Roberts had not actually been removed as an appointor and a beneficiary, as contemplated by the December 2017 settlement.
Furthermore, the reported income of the Trust for the financial years in question was understated as a result of failure to bring trust receipts to account, the inclusion of false deductions, the payment of trust monies to persons who were not entitled to those monies, and payments to Mr Waller in excess of his entitlements. Mawabe is liable to account to Ms Roberts for the additional distributions she should have received.
The claims under heads (1), (2) and (3) disclose breaches of trust on the part of Mawabe which resulted in loss to the trust estate. Mawabe is liable to make good that loss. The breaches in question were effected, or orchestrated, by Mr Waller, making him personally liable for the loss, or, at least, liable for the monies received by him.
As well as being made liable for breach of trust, Mawabe should be removed as the trustee of the Trust and replaced by an independent trustee.
The December 2017 settlement was procured by false statements, or non-disclosures, on the part of Mr Waller, and should be set aside or varied, either so as to leave Ms Roberts as a joint appointor and first corpus beneficiary under the Trust, or so as to increase the settlement sum payable by Mr Waller in Ms Roberts’ favour, or both.
Mr Grieve advanced numerous criticisms of the proposed pleading. Some of these were points of pleading (which does not necessarily detract from their importance). Mr Grieve also submitted, however, that for various reasons the claims were unsustainable as a matter of substance. The following points stood out.
The claims for the financial years 2004-2015 are statute-barred under the Limitation Act (referring in particular to the six-year limitation period on claims for breach of trust imposed by s 48).
The equitable claims (whether or not they are caught by the ) are barred by laches.
The proposed statement of claim alleges that, out of the distributions to Ms Roberts of $2,003,302 for 2004 to 2015, $848,614 remains outstanding. It acknowledges receipt of $1,154,688 in the 2005 to 2015 financial years, made up of the following drawings from the Trust Account (PSC [9] and sch 1):
payments made to a bank account in Ms Roberts’ sole name ($48,810);
payments made directly to the Australian Taxation Office to discharge personal income tax liabilities of Ms Roberts ($66,788); and
one-half of the payments made from the Trust Account to the Joint Accounts ($1,039,090).
It is also pleaded (PSC Sch 6) that Ms Roberts received a total of $276,000 in 2016 and 2017, being half of the drawings paid from the Trust Account to the Joint Accounts in those years. These payments are not credited against the allegedly unpaid distributions up to 2015, but are instead credited against Ms Roberts’ alleged entitlements for the 2016-2017 financial years (see below).
A later section of the statement of claim (PSC [13A]-[18]) alleges that loan account balances for Ms Roberts and the Children (defined as the “Family Beneficiaries”) shown in the financial statements for the Trust from 2011 onwards were deliberately falsified by Mr Waller so as to conceal the true position from those Beneficiaries. In summary, the allegations are as follows.
The balances recorded in the financial statements “were not loans but were the unpaid balances of the Trust income distributed to the Family Beneficiaries”.
None of the Beneficiaries ever “agreed to convert any such entitlement into a loan”.
The balances reflected drawings which had not in fact been paid to the Beneficiaries.
The balance shown as owing to Ms Roberts as at 30 June 2015, as recorded in the 2015 financial statements ($184,659), was retrospectively changed to nil in the 2016 financial statements, for no apparent reason.
The relevant prayers for relief are framed as follows:
(1) A declaration that the first defendant is indebted to the plaintiff in the sum of $848,614, being the balance of the distributions of the income of the Trust declared in favour of the plaintiff in the 2004 to 2015 financial years and not paid to her … as particularised in Schedule 1.
(2) Judgment against the first defendant for the sum declared pursuant to prayer 1, as a debt, alternatively as money had and received, alternatively as equitable compensation.
In Perez de la Sala v Perez de la Sala (No 5) [2026] NSWSC 556 at [36]-[38] I commented on the overuse of claims for declaratory relief in proceedings in this Division. PSC prayer (1) is another instance. There is no point in claiming a declaration that a debt of a particular quantum is owing, followed by the entry of judgment in that amount. The proper course is simply to make a direct claim for judgment in that amount. Prayer (1) should be deleted and prayer (2) amended to specify the amount for which judgment is claimed. I will proceed accordingly.
Legal basis for claim: In the current statement of claim, the plaintiffs claim payment of “distributions made to them … but remaining unpaid, as money had and received”. At J1 [22]-[23], Slattery J commented:
Should the underlying facts be established by the plaintiffs, the framing of the plaintiffs’ claim against Mawabe as one for money had and received is correct in law in the circumstances of this case. The general rule is that the beneficiary cannot bring a common-law action for money had and received against a trustee for monies to which the beneficiary is entitled, while the trustee retains trust duties to perform, because equitable defences and equitable set off remain available until completion of the trust: Fisher v Nemeske Pty Ltd (2016) 257 CLR 615 at [81] and Roxborough v Rothmans of Pall Mall Australia Pty Ltd (2001) 208 CLR 516 at 541 at [67].
But there is an exception to the general rule. A trustee such as Mawabe … who admits having an unconditional obligation to pay a specified amount of money to a beneficiary (such as after a declaration of income accrued in a financial year or in a discretionary trust) can become liable to a common-law action by the beneficiary to recover that amount as money had and received, the effect being to overlay the equitable relationship of trustee and beneficiary with the legal relationship of debtor and creditor: cf Nemeske at [105] and Roxborough at [67].
When, indeed, there is no trust to execute, except that of paying over money to the cestui que trust, the trustee, by his conduct, as for instance, by admission that he has money to be paid over, or by settling accounts on that footing, may, and often does, make himself liable to an action at law at the suit of the cestui que trust, for money had and received, or for money due on account stated.
The comments by Slattery J on the existing statement of claim apply equally to the proposed statement of claim. Ms Roberts’ claim is properly framed as an action at law for payment of the sums owing to her as a result of the distributions in her favour recorded in the Trust’s financial statement (to the extent not subsequently paid to her). The claim in PSC prayer (2) for the entry of judgment “as a debt, or alternatively as money had and received” is apt.
In each financial year, the amount due under the relevant resolution has been calculated based on the reported income of the Trust and set out in the Trust’s financial statements. Ms Roberts separately claims that the reported income is understated, but to the extent of the reported income, the calculation is accepted as the basis for her action. In that respect, Mawabe’s obligations as Trustee are spent.
In these circumstances, I think Ms Roberts’ claim is best characterised as an action in debt on a series of accounts stated, of the type referred to by Rolfe B in Pardoe (the “accounts stated” for this purpose being the calculation of the distributions, not the loan balances, which Ms Roberts does not accept). But characterising it as an action for money had and received makes no practical difference. Such an action is likewise an action in debt: Alexander v Ajax Insurance Co Ltd [1956] VLR 436 at 445 (Sholl J).
It follows that the allegations of false accounting are irrelevant. Whether the distributions credited to Ms Roberts by Mawabe were correctly characterised as loans does not matter. The effect was the same as if they had been. They were debts at law, payable on demand. No question of breach of duty arises (fraudulent concealment could be relevant by way of reply to a Limitation Act defence, but that is another matter) and there is no basis for the alternative claim for equitable compensation in PSC prayer (2). The only question is the extent to which the debts have been repaid.
The allegations of false accounting are inappropriate for another reason. The only issue on the claim is whether the distribution debts were in fact paid. The account balances shown in the financial statements for Ms Roberts’ loan account are not binding on Ms Roberts (and may not be binding on Mawabe: see Nemeske at 646-647, [83] per Kiefel J, although this was a dissenting judgment). Their only significance is evidentiary. As such, they should not have been pleaded because the function of a pleading is to state the material facts, not evidence.
The allegation made in the proposed statement of claim about the retrospective alteration of Ms Roberts’ loan balance as at 30 June 2015 illustrates the point. Ms Roberts may, if she wishes, rely on 2015 financial statements as evidence on what the balance in fact was on 30 June 2015; if she does, the replacement figure in the financial statements for 2016 will be no more than a conflicting piece of evidence on that question, which the Court may or may not be persuaded to prefer at trial.
The primary contention for Ms Roberts under this head of claim relies upon the provision in the Trust Deed which required that, for there to be any departure from the default distribution, there had to be consent from the appointor ([13] above). It is alleged that she did not consent to the distributions which excluded her from participating in the reported income for the 2016, 2017 and 2018 years. The result, so it is contended, is that the relevant resolutions were invalid and Ms Roberts was entitled, in default of a valid resolution, to a half share of that reported income (PSC [24G]).
Ms Roberts entered into the December 2017 settlement, in which she agreed to execute any documents required to remove her as an appointor and as a beneficiary, before the 2018 year-end. But she had not in fact executed any such documents by that point. It is alleged that Ms Gu had not been validly nominated as a beneficiary of the Trust, at least by the 2018 year-end. The result is said to be that on any view Ms Roberts is entitled to a half share of the income attributed to Ms Gu (PSC [24H]).
The alternative contention for Ms Roberts (PSC [24I]) is that, to the extent authorised, the distribution resolutions for 2016, 2017 and 2018 were made without “real and genuine consideration of the interests of the Beneficiaries and for the improper purpose of benefiting Mr Waller”. Those resolutions are therefore liable to be set aside under the doctrine of “fraud on a power” (see Baba v Sheehan [2021] NSWCA 58 at [5]-[6]).
Under the principal contention, the prayers for relief are:
a declaration that the distributions were invalid;
a declaration (unnecessary for the reasons given above) that Ms Roberts was entitled to a half share of the Trust income in each of the relevant years; and
“judgment” against Mawabe for those sums.
Under the alternative contention, the relief sought consists of orders that the distribution resolutions be set aside, and “consequential orders for the reconstitution of the Trust, including expunging any entitlements to [Mr Waller] under those [resolutions] and requiring repayment of the amounts paid to him or applied for his benefit”.
Legal basis for claim: The basic analysis is the same as for the 2004-2015 distributions, but there is a slight difference. The entitlements claimed by Ms Roberts have not been acknowledged by Mawabe as trustee. Therefore a common law action in debt is not available to Ms Roberts. But if she succeeds in establishing her entitlements before the Court, Mawabe will be obliged to recognise them.
Ms Roberts’ claim, to the extent based on her principal contention, is therefore one in the nature of an “equitable debt”. It does not depend upon establishing any breach of trust other than the refusal to recognise the entitlement.
I have already given a general description of Ms Roberts’ complaints about understatement of income. In more detail, the complaints are as follows.
Shortfall in distributions from NT Trusts: according to PSC [6B], the distributions of income to the WF Trust reported in the financial statements of the NT Trusts exceeds the reported income from the NT Trusts in the financial statements of the WF Trust. The total difference over the 2004 to 2018 financial years is approximately $670,000. The allegation is that the monies not paid into the Trust Account were either retained by the NT Trusts or paid directly to third parties for Mr Waller’s benefit; it is said to have been a breach of Trust for Mawabe to allow this to happen (PSC [24AA] and [24B]). The third-party payments from the NT Trusts allegedly for Mr Waller’s benefit (mainly to credit card providers) from 2004 to 2018 are said to total $64,252.00 over that period (PSC [24A(c)]).
Excess payments to Mr Waller: PSC [24B] alleges that for 2014-2018, Mr Waller received “Trust income” in excess of the distributions made to him. The excess distributions are alleged to be (“at least”) a total of $382,000. The calculation of the “excess” credits Mr Waller with monies paid directly to him or for his benefit, and also half the drawings paid into the Joint Accounts**.**
Payments to non-beneficiaries: PSC [24C] alleges that “Trust income” in the 2004-2018 financial years was paid to “people or entities” who were not beneficiaries of the WF Trust. The payments allegedly total $737,000, although this figure is derived from particulars which are set to be the “best particulars” the Family Beneficiaries can currently give.
False interest deductions: PSC [24D] alleges that “from 2008 to 2018, income tax deductions were claimed on behalf of Mawabe for the interest expenses for the capital Trust which had not been incurred”. The effect was to reduce the reported income, and hence the purported income of the Trust available for distribution in those years. The allegedly false deductions from 2008-2018 total $171,000.
The only arguably relevant relief sought consists of a declaration of breach of trust and an order for the payment of equitable compensation, both framed in general terms. But as I will now explain, such relief is not properly tailored to the claim currently in question, and belongs under the claim to have Mawabe make good the trust estate. I will deal with it when I discuss the latter claim later in the judgment.
The focus of the present claim is the shortfalls in the distributions allocated to Ms Roberts. In theory, if the shortfalls could be quantified in the pleading, it would be possible to seek judgment for specific sums by way of equitable debt, just as Ms Roberts’ lawyers have done for the 2016-2018 financial years. There is however an obvious practical difficulty in exhaustively identifying and quantifying at trial all of the respects in which the reported income of the trust was actually understated.
PSC [27]-[28] contain various allegations of breach of trust against Mawabe. For present purposes, the critical ones are:
false accounting (see [51] above);
payment of trust distributions to the wrong persons (as a consequence of the allegedly wrongful income distribution resolutions made in 2016, 2017 and 2018); and
failure to get in the income of the Trust, false interest deductions, wrongful payment of Trust monies to third parties and excessive distributions to Mr Waller (as alleged in connection with the alleged understatement of the reported income of the Trust).
The proposed statement of claim goes on to allege that Mr Waller was personally liable for these breaches of trust by Mawabe. PSC [26] alleges that “as the sole director and controlling mind” of Mawabe, Mr Waller owed personal fiduciary duties, of the same character as Mawabe’s, directly to the Family Beneficiaries. PSC [30]-[31] allege that Mawabe’s breaches of trust formed part of a scheme, defined in the PSC as the “Dishonest and Fraudulent Design”, on the part of Mr Waller to divert income of the Trust from the Family Beneficiaries, making him liable under the second limb of Barnes v Addy.
The proposed statement of claim also pleads a claim of liability against Mr Waller under the first limb of Barnes v Addy. It is alleged that a total of $1.409 million was paid to his personal bank account or credit cards, or to third parties on his behalf or for his benefit (PSC [31A]). The payments allegedly included payments in reduction of a mortgage on property owned by him, and in acquiring, maintaining or improving other property or otherwise applied to investments in his name (PSC [31F]).
Leaving aside declarations, the relevant prayers for relief are:
equitable compensation from Mawabe “in respect of” the alleged NT Trust income shortfall, overpayments to Mr Waller and payments to third parties (but not, curiously, the allegedly false interest deductions), “such compensation to be paid to the Trust as reconstituted in the hands of” an independent trustee (PSC prayer (8));
“all necessary enquiries as to what has become” of the sums of money received by Mr Waller “and the property representing them”, and “consequential orders for the transfer, delivery up or charging of that property” (PSC prayer (15)); this was to include, to the extent that such monies were applied in discharge of secured liabilities, provision for subrogation to the securities in question (PSC prayer (16));
orders that Mr Waller account to the trustee of the Trust for the income and property of the Trust allegedly received by him, to be held under the terms of the Trust (PSC prayer (17));
equitable compensation from Mr Waller to the trustee of the Trust for the loss occasioned to the Trust as a result of the Dishonest and Fraudulent Design, “after allowance for recoveries” (PSC prayer (17)).
PSC prayers (9)-(10) seek orders removing Mawabe as trustee of the Trust and replacing it with an independent trustee. The grounds for the application are not expressly stated**.** Presumably, however, removal is sought on the basis of the allegations of repeated and grave breaches of trust on the part of Mawabe. Furthemore, should Ms Roberts be successful in obtaining orders for account or equitable compensation, there would be obvious difficulties in Mawabe continuing to act as trustee, because of the conflict of interest and duty involved, in any event.
As already noted, Ms Roberts agreed in the 2017 settlement to have no ongoing role, or interest, in the Trust. Even so, if she were to succeed in her claim to be a creditor of the Trust, she would appear to have standing to pursue the removal application. She should have leave to maintain these claims for relief.
(a) the purported distribution to [Mr Waller] of $657,097.00 of Trust income by the resolution dated 30 June 2017;
(b) the accrued unpaid entitlements of the Family Beneficiaries, or the unpaid present entitlements owed to the Trust by the NTP Trust ($825,272.91 as at 30 June 2016; $661,843.14 as at 11 December 2017);
(c) the Trust’s financial statements, distribution resolutions or records; or
(d) that the distributions credited to [Mr Waller] were not paid to him but were retained in the Trust or applied for his benefit, including in payment of his taxation liabilities with Trust money ($185,000.00 in the 2016 financial year and $392,114.15 in the 2017 financial year).
PSC [37] goes on to allege that “no valuation of the Trust, of its entitlements or of the parties’ interests in it … was obtained before the 2017 orders were made”.
PSC [38] alleges that Ms Roberts consented to the 2017 orders in reliance on the disclosures made in the FCC proceedings and without being aware of the allegedly non-disclosed matters. The settlement is therefore said to be liable to be set aside or varied under s 79A of the Family Law Act 1975 (“FLA”) (see s 79A(1)(a)).
There is no independent challenge to the orders (assuming one is to be possible) on the ground of fraud. Nor, it seems, is there any challenge to the financial agreement itself.
The claims for relief are framed as orders under FLA s 79A against Mr Waller. They are: to vary (in a manner unstated) or set aside consent orders 8 and 9 (PSC prayer (21)) or, in the alternative, varying the settlement sum under Order 2 so as to increase that sum (PSC prayer (22)). A consequential order is sought, purportedly against Mawabe as well, for a declaration that “any resolution, deed or instrument made or executed pursuant to” orders 8 and 9 “is of no effect, alternatively an order setting aside such resolution, deed or instrument” (PSC prayer (23)).
Mr Grieve submitted that leave should not be granted to bring this claim, which is entirely new in the current version of the proposed statement of claim. He pointed out that Ms Roberts had had many years to approach the FCC for such relief. He also submitted that the claim had no substance. Ms Roberts had been represented by experienced lawyers in the FCC proceedings. The value of the Trust had been a contested issue. There was no reason to allow Ms Roberts to have another opportunity to reopen the FCC proceedings.
Consistently with my approach elsewhere, I am reluctant at this stage to go into the factual merits of Ms Roberts’ proposed claim. In any event I do not find it necessary to do so.
It is common ground that the Court has jurisdiction to entertain and decide the claim under FLA s 79A: Young v Lalic (2006) 197 FLR 27 at [41]. But whether to exercise that jurisdiction is a matter of discretion.
As I have already pointed out, Mawabe was not a party to the FCC proceedings and was not a party to the orders. The allegation of non-disclosure is made against Mr Waller personally. There is no allegation that Mawabe was in any way implicated in it.
If the consent orders were set aside, that would deprive them of any future effect. But it is another thing entirely to say that the court could set aside, with retrospective effect, a resolution, deed or instrument made as a consequence of the settlement. There is an obvious objection to granting relief which would affect third party rights. The obvious remedy, should the challenge succeed, would be to adjust the settlement sum payable by Mr Waller, which would not affect third parties, and is the remedy sought in the alternative.
I have concluded that, to some extent, the claims articulated by Ms Roberts are viable. Other claims may be viable if the obstacles which I have identified to pleading them can be overcome.
I do not, however, think that it is practicable to grant leave by reference to some part of the proposed statement of claim. The claims which are viable require revision. Nor is it possible to identify at this point which of the claims which might be viable can actually be pleaded. Furthermore, the whole of the statement of claim requires review. The pleading criticisms made by Mr Grieve, which I have not thought necessary to consider in detail in this judgment, need to be considered.
In these circumstances, the existing motion will be dismissed. Ms Roberts will have to pay the defendants’ costs of the motion.
I will however allow a further period of time for Ms Roberts’ advisors to propound what should be the final version of their proposed statement of claim. The parties are invited to agree a timetable for this purpose.
Once a revised version of the statement of claim has been formally filed, the summary judgment application, which addresses the existing version of the statement of claim, should fall away. It will be a matter for the defendants to consider whether, having regard to the form of the statement of claim for which Ms Roberts ultimately obtains leave, and following the filing a defence and any reply, they will bring a fresh application.
For the moment, however, I propose to adjourn the summary judgment motion until the final form of the pleading is settled.
The orders of the Court on the plaintiff’s notice of motion filed 3 August 2026 are:
Order that the second to sixth plaintiffs be removed as plaintiffs in the proceedings and joined as the third to seventh defendants.
Order that the motion otherwise be dismissed.
Order that the first plaintiff pay the defendants’ costs of the motion.
**********
Roberts
Mawabe Pty Ltd (No 2)
[2026] NSWSC 556
(2016) 257 CLR 615
(2014) 87 NSWLR 435
(1954) 91 CLR 112
(2001) 208 CLR 516
(2006) 197 FLR 27
(2003) 212 CLR 484
A change took place in the 2016 financial year (separated in about May 2015, shortly before the end of the 2015 financial year). No distribution of income was made from the WF Trust to Ms Roberts for that financial year. The small distributions to the Children continued, and the remaining income was distributed to Mr Waller. In 2017 the distributions to the Children ceased and Mr Waller received all the income from the Trust. The income for 2018 was shared between Mr Waller and his now wife Ms Gu (see at [7] above; Ms Gu is not a party to the proceedings).
The 2018 financial year covered the December 2017 settlement. That settlement was effected by consent orders made by the Federal Circuit Court on 21 December. That Court has since been renamed the Federal Circuit and Family Court, but for convenience I will refer to it as the “FCC”.
The consent orders were provided in the usual way for the division of family assets between Ms Roberts and Mr Waller. They also required the parties to take further steps to effect the settlement by way of execution of documents and the like.
Relevantly, order 8 provided:
In his further submissions, Mr Grieve KC objected to the way in which the notice of motion had been formulated. He submitted that I should deal with the application to amend strictly on the basis of the 24 July version of the statement of claim. But whatever the rights and wrongs of the matter, I see no point in dealing with the application on the basis of a proposed pleading which has been superseded. I will deal with the application on the basis of the 31 July version of the statement of claim, to which I will refer hereafter as the “proposed statement of claim” or “PSC”.
The December 2017 settlement is a bar to the claims, whether as a contractual release, or a res judicata arising from the consent orders.
Ms Roberts in fact received full benefit from the distributions made in her favour, in the form of drawings which were applied to payment of personal expenses of her own or joint personal and family expenses, and the complaints about understatement of the income of the Trust were misconceived, both matters being addressed in Mr Waller’s affidavit evidence.
Dr Greinke submitted that all of these points raised contested factual issues which could only be determined at trial. He had also included in the proposed statement of claim a section headed “Limitation Act matters” (PSC [42]-[44]) in answer to the defendants’ reliance on the Act. This included allegations that the relevant facts “were concealed” from Ms Roberts and could not with reasonable diligence have been discovered by her before discovery had been given in the proceedings (see s 47). It was also alleged that the “entitlements and debts pleaded herein” had been acknowledged in the financial statements up to and including 30 June 2015 (see s 54). Although the “concealment” was not expressly pleaded to have been fraudulent, the PSC also invoked s 55.
Dr Greinke submitted, correctly, that such limitation arguments gave rise to factual issues which would usually need to be determined at trial. But it is not proper practice to plead in a statement of claim that the plaintiff’s claim is not statute-barred. The proper course is to allow the defendant to plead limitation by way of defence and then challenge the application of the time bar by way of reply. That is the approach which has been followed in the existing pleadings.
I therefore would not permit the inclusion of PSC [42]-[44] even if I were otherwise satisfied that it is in a form suitable to be filed. Nevertheless I will take account of those paragraphs for the purposes of the current argument, as a reply which might be made to the defendants’ reliance on the Act.
For the same reasons, the existence of affirmative defences is not a reason to strike out a statement of claim. The proper course for a defendant with an affirmative answer to the plaintiff’s claim is to plead it by way of defence and then move for summary judgment on that defence.
The present application, however, does not involve an application to strike out the proposed statement of claim. The question is whether to permit it to be filed, and this may give rise to wider considerations, including futility. In a clear case, the Court might refuse leave to propound a claim if that claim is doomed to meet a successful defence. I will return to this issue when addressing some of the individual claims below.
My provisional conclusion is therefore that Ms Roberts should be granted leave to amend so as to pursue a claim for recovery of the distributions, but limited to a claim at law in debt. The claim for equitable compensation and the allegations of false accounting should not be permitted (at least under this head). But whether I should give effect to that provisional conclusion depends upon various other factors, to which I now turn.
Limitation Act and laches**:** On the face of it, the cause of action for each distribution arose on the last day of the relevant financial year (or, at the latest, when the financial statements were prepared). Except in the case of the 2015 distribution, therefore, the causes of action would appear to have arisen more than six years before the proceedings were commenced. But I do not propose to go into whether the action is statute barred, at least at this point. As Ms Roberts is making a common law claim, laches is not an available defence.
As I have explained, Ms Roberts’ claim is an action (strictly speaking, a series of actions) in debt at law. The applicable provisions of the Limitation Act are therefore ss 14(1)(a) (action founded on contract or quasi-contract) and 15 (action for an account at law), rather than, as the parties so far appear to have assumed, the breach of trust provisions in ss 47 and 48. Characterising the claim as an action in debt at common law also affects what facts would have had to have been concealed to sustain a defence of fraudulent concealment. Until the defence and reply are pleaded out, it is not possible to make any meaningful assessment about the extent to which the claim may ultimately be maintainable.
2017 settlement: Similar comments apply to the defence or defences based on the 2017 settlement. The question is whether a debt action by Ms Roberts against Mawabe is covered by the settlement. As Mawabe was not even a party to the settlement, the contention that it is, if that contention is to be pressed, needs proper articulation in a defence, and an opportunity for reply (noting in particular the equity identified in Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 at 129-130), before it can meaningfully be analysed.
Even if a defence that Ms Roberts’ were barred by the 2017 settlement could be properly articulated, that would not be the end of the matter. As already noted, the proposed statement of claim now alleges that the settlement was procured by fraud, or, even if not, should be set aside. Reliance on the 2017 settlement as a defence would bring those further allegations into play. I will discuss this in more detail later in the judgment.
D****rawings from Trust Account**:** As already noted, it is not in dispute that the distributions of reported income in favour of Ms Roberts were credited to a running account, and drawings in her favour (including payments made to third parties for her benefit, such as the payments to the ATO) were debited against that account. Strictly speaking, it is not necessary for Ms Roberts, as plaintiff, to acknowledge those drawings in her pleading. They are not an element of her cause of action. She has, however, done so. And that was the proper thing to do. Failure to reduce her claim so as to take undisputed receipts into account would have been a breach of her obligations under s 56(3) of the Civil Procedure Act 2005.
Most of the drawings from the Trust Account appear to have been paid into the Joint Accounts. Mr Waller says that an analysis of the payments made out of those Accounts shows that those payments were for the benefit of Ms Roberts, or for the family generally. This is disputed, or at least not accepted, by Ms Roberts, and, as her counsel correctly pointed out, it gives rise to a factual issue for determination at trial.
There is however a more fundamental point. Ms Roberts has acknowledged the payments from the Trust Account to the Joint Accounts and treated a half share of those payments as drawings in her favour. But in law she was not a proprietor of a half share of the Accounts; she was a joint owner of the whole. On the face of it, therefore, any payment made by Mawabe to one of the Joint Accounts could be relied upon, as between Mawabe and Ms Roberts, as a discharge of Mawabe’s obligations to her as debtor. Any complaint about the way in which the monies in the Joint Accounts were ultimately used would be a matter solely between Ms Roberts and Mr Waller.
Of course, Mr Waller also received distributions from the Trust, and drawings, in the relevant years. But even so, where a drawing was paid into one of the Joint Accounts, Mawabe would, on the face of it, have had a choice as to whose loan account it should be allocated against. It is difficult to see how Ms Roberts could complain about that choice. Certainly no such complaint is pleaded in the proposed statement of claim.
Whether Ms Roberts is correct in only acknowledging a half share of the drawings paid into the Joint Accounts is a significant issue. The other half of those drawings exceeds the total amount she claims. I do not think that the claim, even in the more limited form which I would otherwise be prepared to allow, should be permitted to proceed to trial unless I am persuaded that there is an arguable case for the limited acknowledgement.
If, under Ms Roberts’ alternative contention, the Court is persuaded to set the resolutions aside, the same analysis applies. I will return to the claim for orders for the “reconstitution” of the Trust below.
The claims based on Ms Roberts’ primary contention are sufficiently pleaded to go to trial. On the face of it, the same could be said of the claims, to the extent based on the alternative contention that there was a failure to pay proper regard to the interests of the Beneficiaries. That clearly gives rise to a factual issue which would need to be determined at trial.
But on reflection the alternative contention so far as the 2018 distribution is concerned may not be so clearly maintainable. That distribution was made after the 2017 settlement, an evident purpose of which was for Ms Roberts to cease to have any involvement with or interest in the Trust. It might be asked how it could possibly be wrong for Mr Waller, on behalf of Mawabe as trustee, thereafter to put her out of consideration for receipt of further distributions. Ms Roberts’ legal advisors will need to consider whether it is properly open to them to advance such a claim on a factual level.
Subject to that qualification, my provisional position is that Ms Roberts should be granted leave to pursue these claims by way of amended statement of claim but limited to claims of “equitable debt”. The claim for equitable compensation should not be permitted. I now turn to the affirmative defences to see whether they qualify this provisional conclusion.
Limitation Act and laches**:** Ms Roberts’ claims concern the distributions for 2016, 2017 and 2018. On no view could any of her causes of action have arisen more than six years before the proceedings were instituted. The Limitation Act is therefore not relevant.
As already noted, Ms Roberts’ claim is one in the nature of a claim for payment of an “equitable debt”. As the claim is equitable in nature, laches may be available even though the statutory limitation period, if any, has not expired. But it is not possible, at this point, to make any judgment about whether such a defence, if pressed, would be an answer to the claim. The defence would need to be articulated, together with any reply, before any form of summary disposal could even be contemplated.
2017 Settlement: My comments about relying upon the 2017 settlement as a bar to claims based on the alleged failure to pay out the 2004-2015 distributions apply equally to Ms Roberts’ claims concerning the 2016 and 2017 distributions (the 2018 distribution postdated the 2017 settlement in any event). It would not be possible to evaluate the maintainability of such defences until they have been properly articulated and a response formulated on Ms Roberts’ behalf.
Mr Grieve however presented a further argument deriving from the 2017 settlement. This argument focussed on the agreement that Ms Roberts would cease to be an appointor, or a beneficiary, under the Trust, and her undertaking to sign any necessary documents to achieve that outcome.
Mr Grieve argued that Ms Roberts could not be permitted to rely upon her status as an appointor or beneficiary when she had agreed to give that status up. He relied upon the maxim that equity regards as done that which ought to have been done. But this maxim’s principal field of operation lies in the recognition of equitable proprietary interests: Dyson Heydon, Mark Leeming, Peter G Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (5th ed, 2015, LexisNexis) at [3-185]-[3-240]. I am not sure that it has any operation in the current context.
The first duty of a trustee is to comply with terms of the trust: Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at 498, [32]. Here, removal of Ms Roberts as appointor (and, it seems, as a beneficiary) could only have been effected by an amendment to the Trust Deed. I think it is questionable whether the making of the December 2017 consent orders would, without more, allow Mawabe (which, it should be repeated, was not a party to those orders) to proceed thereafter on the basis that the necessary amendment had been engrossed and executed.
But even if Ms Roberts’ undertaking cannot be used, by application of the maxim, to shut out her claim, there is another possibility. Ms Roberts would remain an appointor under the Trust, as well as one of the first corpus beneficiaries. But it could be argued that by entering into the 2017 Settlement she had consented to an unequal distribution of the Trust income for the purposes of cl 18 of the Trust Deed ([13] above). The clause contains no formal requirements for consent. The fact that Mawabe was not a party to the settlement, and the lack of a separate formal instrument of consent, might not be fatal to the argument.
These arguments could only apply to the 2018 distribution. It is not necessary to reach any final view about them. They do not justify the refusal of leave at this stage.
If that is not convenient or practicable, the alternative course is to seek an order that an account be taken for the purpose of determining the quantum owed to Ms Roberts. It should be emphasised that this would not necessarily cover every single item of income or expenditure of the Trust over the period; it would only be an account to the extent necessary to quantify Ms Roberts’ entitlement.
The choice of relief claimed raises significant case management issues. If all that is sought at trial is an order for an account, all that has to be proved is that there is sufficient reason for undertaking that account. It would be unnecessary to conduct an exhaustive inquiry into each and every alleged, or possible, instance of understatement.
As already noted, there is no equitable debt claim currently pleaded in the prayers for relief. On the other hand, there is no claim to an account for the specific purpose of determining Ms Roberts’ revised entitlements either. If the claim is to proceed, one or other form of relief will need to be sought.
Legal basis for claim: As already noted, Ms Roberts’ claim is one for amounts due to her under the terms of the Trust Deed, based on what the actual, as distinct from the reported, income from the Trust was in the relevant years. Questions of breach of trust and loss to the Trust Estate are not, as such, relevant.
The allegation of false interest deductions is simple and clear. Subject to the question of Ms Roberts’ entitlement, which I will discuss shortly, the issue is simply whether the deductions claimed in the reported accounts were in fact incurred. On the face of it, this is a factual issue which, subject to affirmative defences, will need to be determined at trial (or in later accounting proceedings).
The other allegations of understatement of the reported income are, however, not so simple. There was nothing wrong in principle with the NT Trusts paying drawings for Mawabe to a third party, so long as those payments were authorised on behalf of Mawabe and accounted for as part of the Trust’s income. It is not enough to allege that distributions which were made to Mawabe by the NT Trusts were not paid into the Trust Account. What needs to be alleged is that such distributions to Mawabe were not included in its reported income in its financial statements.
Similarly, there is nothing wrong in principle with Mawabe having made payments to third parties for the benefit of Mr Waller, provided they were accounted for as drawings by him. Again, the allegation as pleaded is inadequate. It is not enough to allege that “Trust income” (meaning, presumably, monies in the Trust Account) was paid to third parties at Mr Waller’s direction or for his benefit. What must be alleged is that those payments were not accounted for in the Trust’s financial statements as drawings by Mr Waller personally.
The allegation of “excess distributions” to Mr Waller again raises the question about the allocation of drawings paid to the Joint Accounts. The calculation of the “excess” seemingly depends upon the proposition that Ms Roberts and Mr Waller are to be personally credited, as to 50% each, with those drawings. For reasons I have already given, I think this proposition requires justification. To the extent that the claim depends upon the proposition, it should not be permitted to proceed until something more has been said on Ms Roberts’ behalf in support of it.
There is also an overarching question about Ms Roberts’ alleged entitlement to any alleged understatements of the income of Trust. In each of the years up to 2015, the reported income was shared between Ms Roberts, Mr Waller and the Children. If any surplus income is identified, then Ms Roberts would not necessarily be entitled to that income, or to a share of it. That will depend upon the terms of the relevant distribution resolution.
It follows that, for the claim to be maintainable for any particular year, the resolution for that year will need to have given Ms Roberts either the whole or a share of the residual income of the Trust, as opposed to a fixed allocation. Currently the terms of the distribution resolutions are not pleaded. They will need to be if the claim is to be maintained.
For these reasons, if this claim is to proceed it will need to be significantly reconsidered. But to the extent that the problems identified can be overcome, my provisional view is that leave should be granted to Ms Roberts to do so. It will also be necessary to decide whether the claim is to be pursued by way of equitable debt or an account, and the appropriate prayer for relief added. I turn now to the affirmative defences.
Limitation Act and l****aches: To the extent that a claim of understatement is pursued with respect to the period from 2004 to 2014, the cause of action will have accrued more than six years before the proceedings were commenced. The claim is for an equitable debt, rather than a legal one. Sections 14 and 15 of the Limitation Act are therefore not directly applicable. But they may be applicable by analogy (cf Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435 at 456, [70]).
Even so, the earlier comments about the possibility of replies based on fraudulent concealment apply. The defence would need to be articulated and responded to before any question of summary dismissal could arise. The same is so for the laches defence, which would potentially be available to all of the claims, including those for 2015-2018.
2017 Settlement: The previous comments about defences based on the 2017 settlement being a bar to Ms Roberts’ claims apply equally here. Again, no question of summary judgment can arise until the defences, to the extent pressed, are articulated and responded to.
Legal basis for claim: As already noted, the claims of false accounting (allegation (1)) do not sound in loss to the Trust estate. Allegations (2) and (3) do, but they are subject to the points made earlier about the allocation of drawings paid to the Joint Accounts, and the need to allege that payments of “Trust income” were not in fact accounted for in the Trust’s accounts.
To that extent, the claims pleaded may be viable. And they are not limited to the amounts due to Ms Roberts. Mawabe may be required to reinstate the whole of the loss to the trust estate to the benefit of the beneficiaries as a whole. But because the claims are for loss to the trust estate, rather than to Ms Roberts as an individual trustee, leave is required to pursue them. I discussed this subject in Gillespie v Gillespie Cranes Nominees Pty Ltd [2022] NSWSC 1184 at [94]-[108]. Dr Greinke appeared to accept that analysis.
Mr Grieve pointed out that any monies recovered would flow back into the Trust, and Ms Roberts had effectively agreed to withdraw from the Trust following the 2017 settlement. But I do not think that this is an obstacle to pleading the relevant claims for relief. At most, it might be relevant to whether leave should be granted to pursue that claim. In any event, should Ms Roberts succeed in claims against Mawabe, she would have an obvious interest, as creditor, in the trust estate being recouped so that it would be available to meet her entitlements.
Mr Grieve was very critical of the allegations against Mr Waller personally. Mr Grieve pointed out that, in his affidavits, Mr Waller not only dealt with the substance of the allegations, but explained that at all times he had acted on advice from the Trust’s external accountant. I do not, however, propose to go into that at this stage. Mr Grieve’s submissions are on the record and if the claims are pursued, Ms Roberts’ lawyers will no doubt need to give them careful consideration.
My provisional view is therefore that, to the extent that the points to which I have referred can be overcome, leave should be granted to plead these claims. It will be necessary to consider in due course when the application for leave should be dealt with: cf Gillespie at [81].
Limitation Act and l****aches: So far as the claims concern the 2004-2015 financial years, the causes of action would have accrued more than 6 years before these proceedings were commenced. The relevant limitation periods are specified in ss 47 and 48. To the extent that the claims are caught by s 48, they are prima facie statute-barred. But questions of fraudulence remain. Again, it will be necessary for the defence and any response made before any question of summary judgment can be determined. Similar comments apply to the potential laches defences.
2017 Settlement: Again, the defences based on the 2017 settlement being a bar need to be articulated, and any response made before any question of summary determination can arise.
I consider that, at least at present, it would be an inconvenient joinder to permit the claim to go ahead in these proceedings. The proceedings thus far have been concerned exclusively with issues concerning the administration of the Trust and should not be embarrassed by bringing in disputes between Ms Roberts and Mr Waller personally.
I say “at present” because of the possibility that Mawabe might seek to rely on the settlement as in some way operating as a bar to claims against it. While I have doubted that such a defence would be viable, it will ultimately be a matter for the defendants’ advisors to decide whether to pursue it. If they do, the continuing enforceability of the consent orders might conceivably become an issue in these proceedings. For the moment, however, I will not grant leave to include the claim in Ms Roberts’ amended pleading.