Ryan, Eunice Catherine Mary & Ors v Carstensz Properties Pty Ltd & Ors [1979] FCA 87

Federal Court of Australia|1979-07-01|Before: Beane J, Fisher JJ, Fisher J, Deane J

Trust - Acquisition by Company A of Shares in Company B - Loan by Company A to Company B to enable property to be purchased - Finance provided by individual shareholders in Company A - Whether Shares and Loan held by Company A beneficially or upon trust for the individuals - Finding by trial Judge of trust upheld by majority (Beane J. dissenting). ° e

) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.37 of 1978 ) )

| BETWEEN: EUNICE CATHERINE MARY RYAN | - MAUREEN PATRICIA TAYLOR WILLIAM PATRICK RYAN, Jnr. by his next friend

AND: WILLIAM PATRICK RYAN ~ \W.P. RYAN PTY. LIMITED EUNICE CATHERINE MARY RYAN ' MAUREEN PATRICIA TAYLOR WILLIAM PATRICK RYAN, Jnr. ! ° by his next friend EUNICE CATHERINE MARY RYAN PATRICIA LOUISE RYAN by her next friend EUNICE CATHERINE MARY RYAN

' AND: CARSTENSZ PROPERTIES PTY. LIMITED PAUL JAMES REARDON FAITH ANNE SMALL ELMSLEA PTY. LIMITED FRANCIS PAUL REARDON JOHN BEDE REARDON

~ HARRY CASSIDY FOREST PASTORAL COMPANY PTY. LIMITED

AND: J.C. RENNES PTY. LIMITED VINCENT GALLAGHER J.C. RENNES ™~ PAITH ANNE SMALL CARSTENSZ PROPERTIES PTY. LIMITED

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BOWEN C.J.: I have read the reasons for judgment of Fisher J. and I 'am in agreement with them. The parties should have an opportunity of considering the form of order which this Court shovld make. I propose that the matter be

adjourned for a period to enable the appellants to bring in

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MAUREEN PATRICIA TAYLOR WILLIAM PATRICK RYAN, Jnr. by his next friend

EUNICE CATHERINE MARY RYAN ' W.P. RYAN PTY. LIMITED

W.P. RYAN PTY. LIMITED EUNICE CATHERINE MARY RYAN MAUREEN PATRICIA TAYLOR WILLIAM PATRICK RYAN, Jnr. by his next friend

CARSTENSZ PROPERTIES PTY. LIMITED PAUL JAMES REARDON

ELMSLEA PTY. LIMITED FRANCIS PAUL REARDON JOHN BEDE RDCARDON HARRY CASSIDY

. - J.C. RENNES i - FAITH ANNE SMALL ; CARSTENSZ PROPERTIES PIY. LIMITED

DEANE J: Elmslea Pty. Limited ("the Company") was, on 23 July, 1971, incorporated in New South Wales under the provisions of the Companies Act 1961 of that State. On 13 August, 1971,

the Company entered into a contract to purchase a property known as Eimslea which is situated near Bungendore in New South Wales. In September, 1971, the Company allotted 50 fully paid shares of $1 each in its capital to the respondent Carstensz Pty. Limited ("Carstensz") which is a company which had been incor- poratcd in the Australian Capital Territory on 31 October,

Those shares were held in the name of Carstensz until April, 1974 when a transfer of them from Carstensz to the respondent Cassidy was registered by the directors of the Company. I shall, on occasion, refer to those fifty shares as

The primary issuc involved in this appeal is whether,

at the time of their transfer to Mr. Cassidy, Carstensz held the subject shares upon trust for its shareholders or whether, at that time, it held the shares in its own right as beneficial owner. I£ Carstensz held the shares beneficially, they are now held upon trust for Carstensz. IfCarstensz held the shares

upon trust for shareholders in particular proportions, they are

now held upon the same trusts and in the same proportions.

e * The shareholders in Carstensz included, at relevant times, a number of members of the family of Mr. William Patrick Ryan ("Ryan") and a family company, W.P. Ryan Pty. Limited associated with Ryan. It will, on occasion, be convenient to refer to those shareholders collectively as "the Ryan Group". The Ryan Group held between them 15,600 of the 24,200 issued shares in the capital of Carstensz. The remaining shareholders were Mr. Paul James Reardon ("Paul Reardon") (1200 shares), J. C. Rennes Pty. Limited (2400 shares), Dr.J.H. Small (who died before the_-hearing at first instance) and his wife and children (2400 shares in all) and Mr. V.C. Gallagher ("Gallagher") and members of his family (a total of 2600 shares). Each of Paul Reardon, J.C. Rennes Pty. Limited, Gallagher and Mrs. Small who represents her late husband's estate is a respondent to

the proceedings. JI shall, on occasion, refer to them as "the

The subscription for the subject shares was associated with the advance to the Company by Carstensz (either on its own behalf or acting on behalf of its shareholders) of one half of the funds necessary to enable the Company to complete ~he

purchase of Elmslea, It is common ground between the parties -

if indeed there would, in any event, be room to doubt it - that the advance of loan funds to the Company was not a transaction in the ordinary course of Carstensz's business to be funded completely from Carstensz's general funds. It was treated by all as an extraordinary transaction to be financed mainly from funds made available either to or through Carstensz by its

shareholders. Completion of the purchase of Elmsiea by the -

The shareholders who comprise the Ryan Group maintain that the subject shares have, at all times since their allotment, been owned by Carstensz beneficially and that the shareholdings of the various shareholders in Carstensz should be adjusted to reflect their contribution to the funds advanced to the Company to enable the purchase of Elmslea. This adjustment would reduce the Ryan Group's proportionate shareholding in Carstensz. The respondent shareholders maintain that the subject shares have at all such times been held upon trust for the shareholders in Carstensz according to the proportionate amounts of their

The learned judge at first instance (Fox J.) found that, at the time of the transfer, the shares in the Company were not held by Carstensz beneficially but were held upon trust for the shareholders in Carstensz in the proportion to which they had contributed (either by way:of cash or the provis- ion of security) to the funds which were made available to the Company to enable it to purchase Elmsiea. That trust was not

a constructive or resulting trust established by presumption

of law. It was a trust established by agreement or understanding DEANE, J,

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between, or common intention of, Carstensz as trustee and, i . . . presumably, all of its shareholders as cestuts que trust. That | . : . . agreement, understanding or common intention was, so his Honour

found, to be inferred from the facts established before him.

The Company was promoted by Ryan and the respondent Mr. John Bede Reardon ("John Reardon") to purchase Elmslea from the trustees of the Christian Brothers. At the time of the. purchase, the property was occupied by John Reardon, eho is the father of Paul Reardon. After the purchase, John Reardon has continued to make Elmslea his family home. The subscribers to the Company's Memorandum and Articles, each in respect of one share, were John Reardon and his brother, the respondent Francis Paul Reardon ("Francis Reardon"). These two subscriber's shares may have subsequently been overlooked when it came io the allotment of further shares. Ignoring them, the share- holdings of the Carstensz interest and Reardon interests corres- ponded: the 50 shares held by Carstensz were balanced by 50 shares held by the Reardon interests, namely, Francis Reardon, two members of his family and Forest Pastoral Company Pty. Limited, which is a family company associated with John Reardon. The one half of the funds necessary to enable the Company to purchase Elmslea which was advanded by or through Carstensz

was matched by corresponding amounts advanced to the Company by

shares from Carstensz to the respondent Cassidy was executed,

the ostensible directors of the Company included Ryan and his

daughter Miss Eunice Ryan. The view was taken by Paul Reardon DEANE , J.

-6- and some of the other respondent shareholders that neither Ryan nor Miss Eunice Ryan validly held office as directors. Paul Reardon organized a purported meeting of directors at which the decision was made to execute a declaration of trust of the shares and the transfer of the shares to Cassidy. None of the Ryan Group was informed that that meeting was to be held or participated in that declaration of trust and transfer. At the meeting of the Company at which the transfer was registered, Ryan, who was a director of the Company, voted against its registration. Plainly, as between the parties to the present proceedings, neither the declaration of trust nor the transfer of the shares constitutes evidence of a trust or removes from those who assert it the onus of establishing that the shares in the Company were

not held by Carstensz beneficially but were held by Carsténsz

The evidence before the Supreme Court consisted of a large body of documentary evidence and the oral evidence of seven witnesses. All but two of those witnesses have a direct interest in the subject matter of the proceedings. Neither o£ the remaining two, Mr. Neville Houston and the respondent John Reardon, could properly be regarded as independent witnesses. Mr. Houston participated in some of the events involved in the proceedings as accountant and representative of the respondent J.C. Rennes Pty. Limited, John Reardon, in addition to his relationship to his son, Paul Reardon, who has a direct interest in the proceedings, has an obvious indirect interest. If, as he maintains, Carstensz did not own its shares in the Company beneficially but held them upon trust for its shareholders

including his son, the position would be that John Reardon, his

brother and their families controlled the Company which, for

~7- its part, owned the property on which he lived and, apparently,

It was submitted on behalf of the appellants that the

judgment of the learned trial judge contained a number of significant mistakes as to primary facts. That submission was net, in my view, made good. The identified errors of primary

fact in his Honour's judgment (e.g., the names of the shareholders 'in the Company other than Carstensz and the statement of the amount of the deposit for which the final agrecment for the purchase of Elmsiea made provision) are not, in my view, signific- ant. They can readily be explained by the general confusion of

'documentary evidence with which his Honour was required to cope

and plainly were not crucial to his ultimate conclusion.

Of greater importance were two more general submissions as to the factual content of his Honour's judgment which were made on behalf of the appellants. The first was that a general conclusion as to the source of the funds provided by or through Carstensz to the Company for the purchase of Elmslea was wrong. The second was that his Honour had misconceived the nature of the appellants' case before him. I proceed to consider these

submissions in the order in which I have mentioned them.

At a late stage in his judgment, his Honour expressed the conclusion that "it was no part of the arrangements for Carstensz to pay any of the purchase money out of its own general funds, and when the overall position is examined, it is apparent that it did not do so" (italics added). It was

submitted that his Honour was in error in this conclusion. If

the reference to "the purchase money" is' the $50 subscription / . money for the 50 shares, it was pointed out that, by book entry

at least, the so was debited against Carstensz's general funds. If, as would appear to be the case, his Honour was referring to the source of the one-half of the overall funds necessary to enable the Company to purchase Elmslea, the statement, in the context in which it appears in his Honour's judgment, was inaccurate in that, for example, it is incorrect to say in :

relation to the $2500 paid by Carstensz as one-half of the

initial deposit that "it is apparent" that no part of it came

'out of Carstensz's general funds. If this unqualified conclusion

had played an integral part in his Honour's reasoning leading to his decision that the subject shares were held by Carstensz as trustee, there would be considerable force in the appellant's submission. Examination of his Honour's judgment (particularly the immediately following sentences) makes it clear however that

his Honour's generalization as to the source of the funds

" followed upon his conclusion of the existence of a trust and

was not crucial to the decision that that trust existed.

The submission that his Honour had misconceived the nature of the appellants' case was based upon his statement that the appellants had contended "that it was eventually agreed

that Carstensz was to acquire this one-half interest for

itsel£" (italics added). The appellants' case before his Honour was, it was said, the same as was advanced before this Court , namely, that Carstensz was, from the outset, participating in the acquisition of Elmslea on its own account and not as trustce for others. Assuming that this is so, it is not, hovever,

apparent to me that any misapprehension as to the manner in

which the present appellants put their case contributed to

his Honouy's finding that the subject shares were held upon

In my view, the appellants have failed to identify, in the learned trial judge's reasons for judgment, any significant mistake or misapprehension as to the facts which he found to be established by the evidence as distinct from any inferences to be drawn from those facts. Nor, in my view, does examination of his Honour's reasons for judgment disclose

that it is vitiated by any identifiable error of principle or

shares were held upon trust was plainly, to some extent, based on his assessment of the witnesses who gave evidence before him. He expressed his substantial acceptance of the evidence of Rennes, Gallagher and Paul Reardon. He intimated distrust of

"I do not see how Mr. Ryan could have avotded knowing that his co-venturers were interested in "Elmstea", and not in "Yalana", and that what they were wanting, and working towards, was dtreet partietpatton in the "Elmstea" enterprise by holding shares in Emslea (sic) Pty. Limited. fhe inlerventton of Carstensz was to them a complication, not involving a radical change of plan, and I think Mr. Ryan must have apprectated that fact. It ts posstble that some- where towards the end of 1971 he came to believe that partiectpation was only to be in Carstensz, leaving that Company as owner of the investment tn Elmslea Pty. Limiced, but on balanee I do not think he did".

His Honour did not find it necessary to indicate any view of the

not, seen and heard give their evidence or to over-rule the trial judge's findings of fact which are based, in whole or in part, upon such an assessment. This does not, however, mean that an appellate court which is under a duty to hear appeals as to both facts and law and is empowered to draw inferences for itself is entitled, in the absence of such error, mistake or misapprehension, to assert impotence when called upon to examine a decision on contested issues of fact by a judge who has had the advantage of sceing and hearing witnesses give oral evidence before him. In such a case, the trial judge's reasons for decision must be examined in an effort to determine which findings of primary fact were based upon the trial judge's assessment of witnesses and the extent to which the decision

necessarily followed from the findings of primary fact which

I have already stated my conclusion that the appellants have failed to identify, in his Honour's reasons for judgment, any Significant mistake or misapprehension as to fact or any error of principle or mistake of law. Nor is there any basis for inferringthat his Honour's assessment of witnesses or findings of primary fact were affected by any such mistake, misapprehension or error, The appellants have failed to demonstrate that there is any proper basis either for refusing to accept the learned trial judge's assessment of witnesses or for interfering with any particular findings of primary fact - as distinct from inferences from such facts - which were based, in whole or in part, upon that assessment. It

therefore becomes necessary to consider ihe extent to which

his Honour's ultimate decision that there was a trust necessarily

followed from his assessment of the trustworthiness of witnesses . | : .

who gave evidence before him or from conclusions of fact based

The basic facts relating to the incorporation of the Company, the actual purchase of Elmslea, the subscription for the subject shares and the manner in which the funds advanced

to the Company were obtained and paid were largely not*in real dispute. The significant arca of dispute was confined to the ,existence and content of any agreement or understanding between Carstensz and its shareholders that the subject shares be held by it upon trust. Even in that area of dispute, there was Significant agreement as to basic fact: the shares were in the name of Carstensz, there was no resolution of either directors or shareholders of Carstensz that they be held other than beneficially, the $50 subscription money for them was debited by the Company against Carstensz, no-one at any time before the dispute came to a head expressly stated that the shares were held upon trust even when it must have been clear

that Ryan, the person who arranged the transaction, maintained

learned judge's assessment of witnesses and any findings of

primary fact based on that assessment did not resolve the issue of whether there was a trust of the shares. That issue remained to be resolved by inferences to be drawn from the primary facts

established by the evidence. There was material in the

establisned facts supporting his Ilonour's inference of a trust' DEANE | J.

some specific illustrations will subsequently be given. In these circumstances, it becomes necessary to define with some precision the question which arises for the consideration of this Court.

Is that question the question whether it has been shown that the inference of a trust which his Honour made was not reasonably open to him? If that be the appropriate question, I would have little difficulty in deciding that the inference of a trust was reasonably open. Or is that question the question whether this Court, on the facts established before his Honour, is itself of

the view that a trust of the shares should have been inferred?

In Edwards v. Noble ((1971) 125 C.L.R. 296), the Full

High Court, in over-ruling a decision of the Full Court of the Supreme Court of South Australia which had substituted its own finding for that of the trial judge on a question of negligence, gave some apparently general guidance as to the approach which should be adopted by an appellate court when it is required 1o review an opinion or inference based or drawn from the established facts. In the course of his judgment,

"In any appeal against a finding of fact, whether or not by way of rehearing, however much the appellate court may be in an equal position with the trial judge as

to the drawing of inferences, in my opinion, the appellate court ought not to reverse the finding of fact unless it is convineed that itt is wrong. If

that finding ts a view reasonably open on the evidence, tt is not enough in my opinion to warrant is reversal that the appellate court would uot have been praparad on that evidenee to make the same finding. wUerelu differing views do not establish thal either vtew is wrong. But tn dectding that tts own vtew is right

and that of the primary judge wrong, the nature oj the "faet" found by the primary 'judge ts a matter for eonsideratton. Many of the "faels" wtthin the province of the jury involved elements of judgment, some evaluative aspects akin bo an exerctse of dtserettion. Perhaps the "fact" of negligence or no negligence is

of this kind. Others of such facets are mere tnferences from other faets or combinations of facts, though

even in that ease there is an element of judgment in the dectston to draw or not to draw an inference or

to prefer one where more than one inference is reasonably open. But, in any case, the appellate

court in my opinion ts not bound to veverse a primary judge's finding of fact merely because it held a different opinion to that of the primary judge. Where the members of the appellate court are themselves not of a unanimous vtew, there would seem to be good

reason to doubt the propriety'of reversing the primary judge if his finding was reasonably open on the material before him".

McTiernan J. adopted a not dissimilar approach when he

" In my opinton this was not a ease in which a court of appeal might legitimately substitute its econeluston for the judgment of the primary judge"

" The Full Court seemed to me to accept the Learned trial judge's findings as to the ecireumstances of the accident but to reject his inference that the defendant was not negligent in his drtving. In my opinion the evidence does not afford any convincing reason for rejecting that inference. It may well be that tf his Honour had found that the defendant did not take proper cave to avotd the colliston his econeluston could not have been successfully enhallenged before a court of appeal. But consistently with the prinetples which would dictate that result tt should be hetd, in my optnton, that the Full Court ought not to have tnterfered with the dectston which tis the subject of the present appeal".

On .the approach which he adopted, it was nol necessary for McTiernan J. to express the conclusion which he would himself have reached on the established facts and he refrained from

Windeyer J., in his judgment, distinguished between the function of an appellate court when Lhe question is whether a qualitative finding of negligence should have been made when the facts of the occurrence are clear and its function in the ordinary case, such as the present, when the question is simply whether a particular inference should be drawn from established facts (ibid, at pp. 312-313). The fourth of the majority Justices

(Menzies J. dissented) was Walsh J. His Honour wrote (ibid at

" My first observation is that I did not intend by what I wrote in DA COSTA'S CASE ((1970) 124 C.L.R. at p. 817) to assert that in a case of the kind there being considered the appellate court should simply make its own evaluation of the reasonableness or other- wise of the conduct of a party charged with negligence, without any regard to the deetsion of the trial judge. I did not mean to deny the principle whien has been variously stated as being that the court must be econvineed that the trial judge was wrong or that 1t must be satisfied that he was wrong or that it must be persuaded that he was "clearly wrong" or "plainly wrong". My statement that in that ease the judges who formed the majority of the Full Court of Western Australia were not precluded from giving effect to their own conclusions was based upon my view of the etreumstances of that case.

My second observation ts that I have always found much difficulty in distinguishing, in a practical sense, between a conelusion that a trial gudge was wrong and a conclusion that he was elearly wrong.

I think, also, that in the practteal apptteatton of the principle it does not matter much whether tn the statement of it the word "convineed" or the word "satisfied" is used. It may be said, tn my optnion, that in whatever form of words the principle tis ex- pressed, it requires, even in a ease in which the evedtbility of witnesses ts not involved and in whitch

the contest is as to the inference or coneluston that should be drawn from a set of primary facts, that if a choice has to be made between two eonelustons both of whteh are open on the evidence and which are fairly evenly balanced, then the deetiston of the teest judge should stand. fhe appeltate eourt should not deal with the case as if tl were trying it at first instance. But, as has often been stated on high authority, the court hes a duty to make up t£s own

gudgnent of the primary judqe and recognizing that it

ought not to be set astde merely because of a slight

preference for a different view upon a questton upon

| which two vtews are open and as lo which there is no definite preponderance of one vtew over the other. Subject to that limitation and subjeet to the well- recognized limitalions concerning conflicting testimony and the eredtbility of witnesses, the appellate court should give effect to its own eoneluston".

Edwards v. Noble (supra) at least established that, in the

words of Walsh J., "even in a case in which the credibility"

of witnesses is not involved and in which the contest is as

to the inference or conclusion that should be drawn from a

set of primary facts, ... if a choice has to be made between

two conclusions both of which are open on the evidence and which are fairly evenly balanced, then the decision of the trial

judge should stand". On that at least, it would have seemed

to me that Barwick C.J., McTiernan and Walsh JJ. were all in

agreement. In Warren v. Coombs ((1979) 23 A.L.R. 405) however,

a majority of the Full High Court (Gibbs, Jacobs and Murphy JJ.)

concluded that this was not so. Their Honours stated (ibid

"The dteta of Menates and Walsh JJ. in EDWARDS v. NOBLE are opposed to those of Barwick C.d. and VWindeyer J, and Mefternan J decided the ease on the facts. The case ts a useful repository of state- ments of principle, but tt is not a binding authority tin favour of any particular view".

In Warren v. Coombs (supra), Gibbs, Jacobs and Murphy

JJ., after consideration of a number of House of Lords and High Court decisions, laid down the approach to be adopted by an Australian appellate court in a case such as the present as

"Shortly expressed, the established princtples are,

we think, that in general un appettute courl is in as good a posttion as the trtal judge to dectde on the proper tnferenee to be drawn from facts which are undisputed or which, having been disputed, are estab- lished by the findings of the trial judge. In deciding

. what is the proper inference to be drawn, the appellate court wtll give respect and weight to the eoncluston of the trtalt judge, but, once having reached its own conetusion, will not shrink from giving effeet to it. These princtples, we venture to think, are not only sound tn law, but benefictal in their operation".

It may appear, at first sight, that the approach laid

down in Warren v. Coombs (supra) is, in substance, that, stated

by Walsh J. in Edwards v. Noble (supra), where his Honour, in

terms, stated that the appellate court had "a duty to make up

its own mind" and to "give effect to its own conclusion". While the results of the two approaches will commonly coincide, there is, however, a difference of principle between them. In Walsh J's overall view, the primary question was whether there was

such "a definite preponderance of one view over the other" as to justify the intervention of the appellate court at all. If there was not, that was the end of the matter and it was not necessary for the appellate court to reach any further conclusion for it-

self. Thus, in Edwards v. Noble (supra), Walsh J., like

McTiernan J., refrained from indicating what his own conclusion

would have been. On the other hand, in the majority judgment

in Warren v. Coombs (supra) at p. 424, their llonours stated that

the New South Wales Court of Appeal had been "obliged to reach its own conclusion as to the inferences to be drawn from the primary facts found by the learned trial judge".

Warren v. Coombs (supra), spell out precisely what was involved

un the obligation to give ''respect and weight" to the conclusion

af the trial judge. The reason may have been that observance

of the obligation will involve differences in emphasis and approach from cdse to casc. [I have, in the present case, endeavoured fully to discharge the obligation by approaching

the question whether an inference of a trust should be drawn, through his Honour's judgment and with a conscious predisposition in favour of his Honour's finding that there was a trust of

There was, as has been mentioned, material in the facts which supported his Honour's inference of a trust. The strongest supporting documentary evidence was Gallagher's letter of 6 July, 1971, in which he expressly stated that part of the funds advanced by him were "for the acquisition of 1200 shares of $1.00 in Elmslea". The force of that written contem- poraneous statement is diminished by some of the contents of Gallagher's own notes of the meeting of directors of Carstensz o£ 14 August, 1971 ("Discussion mainly on Co's acquisition of shares in Elmslea Pty. Ltd" and "50% of Elmslea Pty. Ltd. 1s acquired/held by Carstensz Prop. Pty. Ltd. Access to Elmsica is .. by way of Carstensz Props. & "Carstensz" individuals have no direct holding in Elmslea"). It is also diminished by the fact that the shares to which that letter purportedly referred (i.e.
1200 shares at $1.00 in Elmslea) were never issued and that subsequently, in his letter of 17 August, 1972, Gallagher indicated , that the relevant $1200.00 was part of a "loan to Carstensz ... repayable at call". Another item of documentary evidence which would militate against any suggestion of "recent

invention" on the part of the Reardons is the loan agreement

relating to a loan made by lrancis Reardon to Paul Reardon hy

which Paul Reardon charged "the whole of the shares in his name

or hereafter to be allotted to him" in the Company with repay- ment of the loan. The strongest oral evidence is probably that relating to the statement made by Dr. Small on 15 August, 1971. The evidence as to exactly what Dr. Small said varies. The version which most clearly favours the drawing of an inference of a trust is that of Paul Reardon to the effect that Dr.

Small stated ''that the cash or security raised for the purchase of Elmslea would be a direct investment in Elmslea". A number of other examples, including some passages in the cross-examination of Ryan, could be given of oral evidence which lends some support for the respondent shareholders' case. One such example is the evidence of Gallagher that at the Junc, 1971, Meeting of Directors of Carstensz he stated that he had "practically decided to take up 5% in Elmslca and that I was

not interested at all in taking up any further shares in

Notwithstanding the material in the evidence which supports the drawing of the inference which his Honour drew and the respect and weight which should be accorded to his Honour's finding of a trust, I have reached the conclusion that the inference that the shares were heid on trust should not be drawn. In my view, the correct inference to be drawn from the facts is that the subject shares were held by Carstensz beneficially.

That overall vicw is the result of a reading and re-reading of the record of both oral and documentary evidence rather than the result of the identifiable effect of particular items of cvidence. I shali-however indicate, in summary form, some of the particular

aspects of the evidence which have played a part in leading me

The Minutes of the Annual General Meeting of Carstensz which was licld on 9 August, 1970 make clear that it was the company Carstensz

in its own right that was seen as the nominee of Ryan to acquire an intcrest in the property Elmstea. The interest in the property Eimslea subsequently became the fifty shares if the Company which acquired the property;

The balance sheet and accounts of Carstensz which were received by directors and shareholders and which were not, when received, questioned in this regard, are consistent only with the shares held by Carstensz in the Company being held by it beneficially and with the moneys advanced to the Company in connection with the purchase of Elmslea either coming (as in the case of half of the first payment by way of deposit) from Carstensz's own funds or being borrowed by Carstensz from the Bank or its share- holders and-lent by Carstensz to the Company. They show that the subscription moneys ($50) were treated as coming from Carstensz, that the shares were treated as an asset of Carstensz, that the associated funds advanced to Elmsica were scen as loans by Carstensz, that the moncy advanced by the Bank comprised a loan to

Carstensz and that moneys advanced by shaie- DeEque , J.

~21- liolders were likewise-by way of loan to Carstcnsz;

The Minutes of subsequent meetings of directors of Carstensz (at one or more of which each of

the shareholders (or a representative) was present) clearly, in my view, support the conclusion that the shares held by Carstensz

for example, the Minutes of the Directors' Meeting of 14 August, 1971 (the day after the final contract for the purchase of Elmslea-is dated) state: "It was agreed that shareholdings in Carstensz Properties Pty. Limited would have to be reviewed after the final figures were known

as to the cash and security invested by each shareholder in Carstensz Properties Pty. Limited". In that regard, and while there are no doubt

some errors in these Minutes, I was not persuaded by the arguments of senior counsel for the respondents aimed at generally discrediting

Gallagher's agenda item and the decision of the meeting of directors of Carstensz of 20 November, 1971 as to the payment by Carstensz to Ryan

payment related at least in part, to "recognition" of Ryan's efforts in relation to the Elmstea

The balance sheets (and, presumably, the books) of the respondent J.C. Rennes Pty. Limited showed its investment as being in shares in Carstensz and loans to Carstensz and the Company. It would seem that there was no suggestion in them of J.C. Rennes Pty. Limited having any beneficial interest in the shares held by Carstensz in the Company. This seems to have accuratcly represented J.C. Rennes Pty. Limited's understanding at the relevant time. Thus when Mr. Houston, the accountant for J.C. Rennes Pty. Limited, went to the meeting of directors of Carstensz of 18 December, 1971 it was not to suggest that Carstensz's shares in the

Company were held in trust for, inter alios, his client. It was to suggest, among other things, that one way in which Carstensz could raise money was, to use his words, "to sell

the shares in Elmslea or to sell Yalana" (a property which Carstensz owned) "one or the

The evidence of Paul Reardon as to the conver- sation between himself and Mr. Ryan in July, 197]: 'ne were discussing wy - the fact thal if Elmslea was purchased in the name of Carstensz Properties because I held 5% of

Carstensz Properties, I would automatically PeanF 7.

hold 2%% of Elmslea". This evidence is only consistent with the view that, in July, 1971, it was proposed that Carstensz would hold its interest "in Elmslea" beneficially and not as

(vii) The complete absence in the evidence of any unequivocal contemporaneous statement to the effect that Carstensz held the shares in the Company in trust for its shareholders. In my view, the absence of any suggestion of any such statement in a situation where the shares were held in the name of Carstensz and had,

My conclusion that the shares were held by Carstensz beneficially has not been reached with any degree of confidence. It could not be said that the trial judge's finding of a trust was not reasonably open on the evidence. It could not be said,

to adapt the words used by Barwick C.J. in Edwards v. Noble

(supra), that I am convinced that that finding is wrong. Particularly in the situation where the other members of the Court are in agreement with the trial judge, I have hesitated

In Cashman v. Kinnear ((1973) 2 N.S.W. L.R. 498 at p.

Jacobs J., when President of the New South Wales Court

of Appeal, propounded the duty of an appellate judge in dealing with an appeal on the facts against a finding of negligence in terms which, apart from any difference between giving "great weight" and giving "respect and weight" to the conclusion

of the trial judge, correspond with what was said in the majority

judgment in Warren v. Coombs (supra). His Honour decided, in

the circumstances of Cashman v. Kinnear (supra}, that his

"initial inclination" was outweighed by the weight he should give to the findings of primary and secondary fact by the trial judge and that he was, therefore, obliged to endorse the trial judge's finding and adopt the same conclusion. The. view which I have formed, on the facts of the present case, that no trust

of the subject shares can be properly inferred is, however, more than an inclination: it is a considered conclusion. In the circumstances, I regard myself as constrained by what was said

in the majority judgment in Warren v. Coombs (supra) to give

I would allow the appeal and discharge the orders made by the learned trial judge. I would declare that the subject shares are held by the respondent Cassidy upon trust for Carstensz. I would adjourn the further hearing to a convenient day for hearing any submissions which the parties might wish to make as to any ancillary orders and as to the appropriate

NEW SOUTH WALES DISURICT REGISTRY ) No. G.37 of 1978 a ) GENERAL DIVISION )

BETWEEN: EUNICE CATHERINE MARY RYAN eenere PATRICIA _ TAYLOR VILLIAM PATRICK RYAN, Jnr. by his n

WP. RYAN PTY, LIMITED BUNICE CATHERINE MARY RYAN MAURTEW PATRICIA TAYLOR WILLIAM PATRICK RYAN Gnx. by his next friend

AND: CARSTENSZ PROPERTIES PTY. LIMITED PAUL JAMES "REARDON

HARRY CASSIDY FOREST T PA STORAL COMPANY PTY. LIMITED

FISHER J.: Thas is an appeal against a decision of the Supreme Court of the Australian Capital Territory (Fox J.) reasons for

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (328 paragraphs)

Cited By (1)