Scott MacRae Investments Pty Ltd & Anor v Baylily Pty Ltd & Anor

Judgment 1BEAZLEY JA : I have had the advantage of reading in draft the reasons of Giles JA and of Hodgson JA. I agree with the reasons and orders of Giles JA. I also agree with the additional comments of Hodgson JA. I would only add that like Hodgson JA, I also consider that this appears to have been a case where the applicant sought a tactical advantage which was not appropriate in the circumstances. This statement fully acknowledges the inadequacies in the respondent's pleading. Nonetheless, the law is clear as to when judgment may be obtained on admissions and when it is appropriate for summary judgment to be given. The applicant's attempts to obtain finalisation of the issues subject of the appeal by these procedures was misconceived. Unfortunately, it has been a costly exercise. 2GILES JA : These are applications for leave to appeal and cross-appeal from decisions of Einstein J, heard on full submissions so that if leave be granted the appeal or cross-appeal can be decided without a further hearing. The applicants wish to appeal from his Honour's refusal of their application for judgment on admissions or summary judgment and from an order for decision of separate questions. The respondents as cross-applicants wish to appeal from his Honour's order that they pay the costs of the application on an indemnity basis. 3For the reasons which follow, leave to appeal and cross-appeal should be granted; the appeal from refusal of the application should be dismissed but the appeal from the order for decision of separate questions should be allowed; and the appeal from the order for costs on an indemnity basis should be allowed.

The applicant's claims 4The proceedings were brought in the Commercial List. The structure of a summons in the Commercial List is that the plaintiff first sets out the relief claimed, and then states the nature of the dispute, the issues likely to arise, and the plaintiff's contentions. The defendant files a Commercial List response, with the defendant's statement of the nature of the dispute and the issues likely to arise and the defendant's response to the plaintiff's contentions. 5There were many claims in the proceedings. The application was concerned only with the relief claimed in paras 1 to 8 of the claims to relief in the amended summons, which were founded on the contentions in paras C1 to C24 of the applicants' contentions. 6In the amended summons the applicants relevantly described the nature of the dispute - "1. Claim by an investment company for declarations that it has been appointed the new trustee of an investment trust in place of the former trustee, that the assets of the trust have vested in it pursuant to the trust instrument and/or s 9 of the Trustee Act 1925 (NSW), and for orders that the trust property be transferred to it. 2. Claim by the investment company that the trust property includes 1 of the 2 units in a second trading unit trust that carries on business as a commercial macadamia plantation. ... 5. Claims for related or ancillary relief including ... for the taking of accounts." 7The applicants relevantly stated as issues likely to arise - "1. Whether the investment company has been appointed trustee of the investment trust in place of the former trustee, whether the trust property has vested in the new trustee, and whether orders should be made for transfer of the trust property. 2. Whether the first unit in the second trading unit trust is trust property of the investment trust and whether it should be transferred to the new trustee." 8The claims to relief fell into two groups. 9The first group of claims were made by the applicants, Scott MacRae Investments Pty Ltd ("SMI") and Mr Scott MacRae, against the first respondent, Baylily Pty Ltd ("Baylily"). The relevant contentions were set out in paras C1 to C15 of the amended summons. 10It will be necessary to return to the terms of some of these paragraphs. In summary, it was contended that Baylily had been the trustee of the Scott MacRae Trust ("the Trust"), of which Mr MacRae was a beneficiary; that Mr MacRae had the power to appoint a new trustee and on 13 November 2008 had appointed SMI as trustee of the Trust in place of Baylily; that Baylily had "refused or neglected" to transfer the trust property to SMI, save for some land in Queensland, or to hand over to SMI the books and records of the Trust; and that Baylily had failed to provide Mr MacRae with financial statements for the Trust or "periodic accounting of the administration of" the Trust for the years ended 30 June 1997 and thereafter. 11From these contentions came the claims in paras 1, 2, 3, 6, 7 and 8 of the claims to relief - "1. A declaration that the First Plaintiff, Scott MacRae Investments Pty Ltd ('SMI'), was appointed trustee of the Scott MacRae Trust in place of the First Defendant, Baylily Pty Limited ('Baylily'), on 13 November 2008. 2. An order, including pursuant to s 9(7) of the Trustee Act 1925 (NSW), that Baylily do all acts, matters and things necessary or convenient on its part to transfer to SMI all property of the Scott MacRae Trust. 3. An order that Baylily forthwith deliver up to SMI all books, records, documents and other material pertaining to the Scott MacRae Trust. ... 6. A declaration that the Second Plaintiff ('Scott') is a beneficiary of the Scott MacRae Trust. 7. An order that an account be taken of all moneys received and disbursed by Baylily (or by any person on its behalf) in connection with the Scott MacRae Trust, and of the dealings and transactions of Baylily in connection with it. 8. An order that Baylily pay to SMI (as trustee for the Scott MacRae Trust) the amount found due to it upon the taking of such account, together with interest on that sum pursuant to s 100 of the Civil Procedure Act 2005 (NSW)." 12The second group of claims was made by SMI against Baylily and the second respondent, Pacific Lennox Properties Pty Ltd ("PLP"). The relevant contentions were set out in paras C16 to C24 of the amended summons. Again in summary, it was contended that PLP was the trustee of the Pacific Lennox Unit Trust ("the PLP Trust"); that Baylily held one "A" class unit in the PLP Trust as trustee for the Trust; that there had been the change of trustee and the refusal to transfer trust property as earlier contended in paras C1 to C15; and that Baylily had refused to transfer the "A" class unit to SMI. 13From these contentions came the claims in paras 4 and 5 of the claims to relief - "4. A declaration that the 1 "A" Class Unit held by Baylily in the Pacific Lennox Unit Trust, of which the Second Defendant, Pacific Lennox Properties Pty Limited ("PLP") is trustee, is trust property of the Scott MacRae Trust. 5. An order that Baylily and PLP do all acts, matters and things necessary or convenient on their respective parts to: (a) register SMI as the unit holder of that "A" Class Unit in the Register of unit holders of the Pacific Lennox Unit Trust in place of Baylily; and (b) issue SMI with the appropriate Certificate for that "A" Class Unit. 14If the "A" class unit was trust property of the Trust, and in the Commercial List response Baylily admitted that it was, its transfer to SMI would fall within the relief claimed in para 2 of the claims to relief. In the second group of claims it appears to have been thought necessary to obtain a declaration and order directly against PLP. 15The appointment of SMI as trustee of the Trust in place of Baylily was essential to the relief claimed in paras 1, 2, 3 and 5 of the claims to relief. The appointment and when it occurred could be material to the relief claimed in paras 7 and 8, as it would mark an end to Baylily's formal stewardship of the trust property (although responsibilities would remain until transfer of the trust property to SMI). From the contentions, the claim to an accounting by Baylily appeared to be free-standing, a complaint of failure to account over many years, but in written submissions to which I will come it was said that there should be an accounting because of the change in trustee. That was ultimately the applicants' position in this Court, and so those claims also required appointment of SMI as trustee of the Trust in place of Baylily. 16In the course taken by the application for leave to appeal, attention can be focussed on the appointment of a new trustee and an accounting by Baylily. It is sufficient to refer to the terms of the following paragraphs of the applicants' contentions, and later to the response to those paragraphs. 17As to the appointment of a new trustee, the clauses of the trust deed giving the power of appointment were alleged in paras C6 and C7 and the appointment was alleged in paras C10 and C11 - "6. The power to appoint a new trustee in place of an existing trustee (and to remove a trustee) was, during his lifetime, vested in Scott. Particulars cl 7(1) of the Scott MacRae Trust Deed 7. The power to appoint or remove a trustee might be exercised by memorandum under hand or by deed, and where the trustee was a corporation, was to be approved by resolution of its directors. Particulars Cl 7(6) of the Scott MacRae Trust Deed ... 10. By a Deed Poll of Change of Trustee made on 13 November 2008 ('the Deed of Change of Trustee'), pursuant to cl 7 of the Scott MacRae Trust Deed, Scott appointed SMI as trustee of the Scott MacRae Trust in place of Baylily, with effect from 13 November 2008, and Baylily was removed as trustee of the Scott MacRae Trust from that date. 11. The appointment of SMI as new trustee of the Scott MacRae Trust was approved by resolution of SMI's directors." 18As to an accounting by Baylily, it was only said in para C12 - "Baylily has failed to provide Scott with periodic accounting of the administration of the Scott MacRae Trust or financial statements for it for the years ended 30 June 1997 to date." 19These paragraphs were amongst those taken up by para C22 in relation to the claims against Baylily and PLP, in the brief terms "SMI repeats paragraphs 1 to 15 above".

The respondents' response 20The Commercial List response did not relevantly engage with the applicants' statement of the nature of the dispute. It included under "Issues likely to arise" - "1. On 21 January 2010, Harrison J, of this Court, provided Advice to the First Defendant ([2010] NSWSC 6) following an application made pursuant to section 63 of the Trustee Act 1925 (NSW). The effect of that advice is that the First Defendant does not seek to challenge paragraphs 1, 2, 3, 4 and 6 of the relief claimed. If SMI is able to demonstrate that it has been validly appointed in place of Baylily as trustee of the relevant trust, then Baylily will not challenge the relief sought in paragraph 5. This disposes of the first two paragraphs of the Plaintiff's issues. In addition to the matters to which the plaintiffs refer, and subject to the matter conceded in paragraph 1 above, the defendants say that the following issues arise: 2. Whether the plaintiffs or either of them have standing to obtain some or all of the relief which they seek. This includes any entitlement to an accounting in the circumstances pleaded." (Bold in original) 21At least on appeal, the first paragraph set out above was at the heart of the appellant's case for judgment on admissions. In these reasons I will call it "the issues response". 22As to the appointment of a new trustee, the respondents said in their paras C2 to C5 - "2 In answer to paragraph 6 of the Contentions, the defendants say as follows: (a) Baylily admits that a term of the Scott MacRae Trust Deed is that the Second Plaintff, Scott Alexander MacRae (Scott), was vested with certain powers but otherwise does not know and cannot otherwise admit whether Scott purported to relinquish any of the said powers in accordance with the Scott MacRae Trust Deed; and Particulars Clauses 7(2) and 7(3) of the Scott MacRae Trust Deed (b) the remaining Defendants do not know and cannot admit the paragraphs as they are not parties to the matters alleged and nothing is therein alleged against them. 3. In answer to paragraph 7 to 9 of the Contentions, the defendants say as follows: (a) Baylily admits the paragraphs; and (b) the remaining Defendants do not know and cannot admit the paragraphs as they are not parties to the matters alleged and nothing is therein alleged against them. 4. In answer to paragraph 10 of the Contentions, the defendants [sic] say as follows: (a) Baylily admits: (i) the existence of a document described as a Deed Poll of Change of Trustee dated 13 November 2008 (the Deed Poll); and (ii) that the Deed Poll was effective from such date on or after 13 November 2008, when a valid resolution by SMI consenting to become the replacement trustee took place; and (b) the remaining Defendants do not know and cannot admit the paragraph as they are not parties to the matters alleged and nothing is therein alleged against them. 5. In answer to paragraph 11 of the Contentions: (a) Baylily admits that the resolution (if it was made) was effective from the date it was made; and (b) the remaining Defendants do not know and cannot admit the paragraph and they repeat the matters pleaded in paragraph 4 hereof." 23It may be noted that there was a misconception that the allegations were not made against PLP. The appointment of SMI as trustee was alleged against PLP, as part of the occasion for orders that SMI be registered as holder of the "A" class unit and a certificate be issued to it as claimed in para 5 of the claims to relief. So far as PLP could admit the various allegations, it should have done so. As will be seen, at least in their written submissions to the primary judge the applicants appear to have had a similar misconception as to the allegations against PLP. 24As to an accounting by Baylily, in their para 6 the respondents did not admit para 12 of the applicants' contentions, and added some matters which do not seem to be responsive to the allegation. 25In the response to para C22 of the contentions against Baylily and PLP, in para C14 of the response the repeated C1 to C15 were globally admitted by Baylily and PLP "subject to the matters pleaded in paragraphs 4 and 5 above". In para C15 of the response Baylily admitted that SMI was entitled to become the registered holder of the "A" class unit "subject to the matters pleaded in paragraphs 4 and 5 above" and PLP did not admit that allegation.

The application 26By their amended notice of motion the applicants claimed relief corresponding to the claims in paras 1 to 8 of the claims to relief in the amended summons, although differently arranged. The following table will be helpful. Relief sought in amended notice of motion Relief sought in the amended summons Short statement of relief 1(a) 1 Declaration of appointment of new trustee 1(b) 4 Declaration that "A" class unit is trust property of the Trust 1(c) 6 Declaration that Mr MacRae is a beneficiary of the Trust 1(d) 3 Order that Baylily deliver up books and records 1(e) 2 Order that Baylily transfer trust property 1(f) 5 Order for registration of "A class unit and issue of certificate 1(g) 7 Order that an account be taken 1(h) 8 Order that Baylily pay amount found due on taking the account

27It should be said that there was no occasion to claim a declaration that Mr MacRae was a beneficiary of the Trust. That may have been an inappropriate claim from the beginning in the absence of any dispute, and it had been admitted by Baylily in para C1 of the response. Its relevance would appear to be to Mr MacRae's standing to seek the accounting, which concerned only Baylily. That Mr MacRae was a beneficiary of the Trust was no more than a fact on the way to the substantive relief claimed, and it is ordinarily not appropriate to embody such matters in a declaration: Warramunda Village Inc v Pry de [2001] FCA 61; (2001) 105 FCR 437 at [8]; Australian Competition and Consumer Commission v Francis [2004] FCA 487; (2004) 142 FCR 1 at [96]. 28The application was expressed to be made "pursuant to Rules 17.7 and/or 13.1 of the Uniform Civil Procedure Rules" . 29Rule 17.7 provides for judgment on admissions - " (1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. (2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined. 30Rule 13.1 provides for summary judgment; relevantly - " (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires." 31The application was supported by affidavits of Mr Simon Mitchell, the applicants' solicitor, sworn on 5 February 2010 and 17 February 2010. They were subject to a number of objections. The respondents read an affidavit of Mr Robert Gorczyca, their solicitor, sworn on 4 March 2010, to which there were no objections. 32At least on appeal, the applicants relied only on the Commercial List response and one document in Mr Mitchell's evidence for judgment on admissions, and on the Commercial List response plus more of Mr Mitchell's evidence for summary judgment. The line between admissions and evidence may have become blurred before the primary judge. 33I will come to parts of the evidence of Mr Mitchell and Mr Gorczyca. For the present it may be said that Mitchell gave a deal of evidence on information and belief, and that the respondents' objections included that this evidence was inadmissible because the applicants were seeking final relief and s 75 of the Evidence Act 1995 did not apply. Section 75 provides that the hearsay rule does not apply in an interlocutory proceeding if the party who adduces it also adduces evidence of its source; in older language, if it is evidence on information and belief. As later described, the primary judge appears to have upheld the s 75 objections. The applicants did not contend on appeal that the application was an interlocutory proceeding, or that the evidence was otherwise admissible so far as evidence on information and belief. 34The application came before the primary judge on 5 March 2010, together with other applications made by the respondents to which it is unnecessary to refer. With some to-ing and fro-ing, his Honour was apprised of the issues and the parties' positions and received some submissions. However, the affidavits were not then read. The matter was left on the basis that the affidavits would be provided to the primary judge together with the respondents' objections to Mr Mitchell's affidavits. Although it was not clearly stated, it appears to have been understood that the parties would also provide more full written submissions. 35In the course of the hearing on 5 March 2010, at an early time the primary judge raised in something of an aside the possibility of an order for decision of a separate question. At a later time counsel for the applicants observed that his Honour had expressed "interest in an appropriately worded separate question" in lieu of the application, and asked that he "indicate to me" and said that he would "attempt to address your Honour on that". The judge declined any indication. Counsel put submissions to the effect that no party other than Baylily and PLP was affected and a separate question was not necessary. Counsel for the respondents said nothing as to a separate question. 36Written submissions were provided, the applicants' written submissions on 8 March 2010 and the respondents' written submissions on 9 March 2010. 37As to the appointment of a new trustee, the applicants' submissions canvassed the relevant paragraphs of the contentions and the response to the contentions and added references to evidence in Mr Mitchell's affidavit. Their thrust was to demonstrate that the contentions were admitted or, so far as not admitted, were proved by the evidence in the affidavits. The applicants relied on Baylily's admissions and said that the non-admissions by the other defendants were "of no significance" because "the first claim" was not made against them; the same was said as to "the second claim" notwithstanding that it was made also against PLP. 38The argument in the applicants' written submissions in relation to paras C6 and C7 of the amended summons was that the former was proved by the copy trust deed annexed to Mr Mitchell's first affidavit and the latter was admitted. The argument in relation to the central paras C10 and C11 was that Baylily's "limited admission" appeared to be directed to seeking formal proof of the Deed Poll of Change of Trustee and of SMI's resolution, and that this had been done by Mr Mitchell's affidavits annexing the Deed Poll of Change of Trustee and a copy of minutes of a resolution of SMI by Mr MacRae as sole director. The submissions referred to the issues response somewhat in passing. After the detailed canvassing of the paragraphs of the contentions and the response to the contentions, it was said that "[a]t the very least, on the statement in Paragraph B1 of the Amended Response, [the applicants] are entitled to the relief in Prayers 1, 2, 3, 4 and 6 (Prayers 1(a)-(e) [sic]". 39As to an accounting by Baylily, the applicants' submissions said that, if SMI had replaced Baylily as trustee of the Trust, "as the new trustee it is entitled to an accounting from the old (outgoing) trustee", especially when there were allegations that Baylily had failed properly to account or provide financial statements "since effectively [the Trust's] inception". Again somewhat in passing, it was also said that as a beneficiary of the Trust, Mr MacRae "is also entitled to such an accounting". 40The respondents' submissions were not structured similarly to the applicants' submissions. As to the appointment of a new trustee, the respondents set out their "position" in paragraphs taken up by the primary judge, see at [46] below. It was submitted that the admissions did not go far enough for the relief sought, and that the evidence in Mr Mitchell's affidavits were largely inadmissible because s 75 of the Evidence Act did not apply and particularly that the evidence "does not establish that the resolution was validly made on the day asserted". As to an accounting by Baylily, the submissions were in part based on the false premise that an accounting was sought on a "special basis", but they included assertions that SMI had no standing to seek an accounting and that the right of a beneficiary to an accounting was limited. These assertions were not developed. A comprehensive table of s 75 and other objections was included. 41Particularly as to the appointment of a new trustee, the s 75 objections included objections to the paragraph stating on information and belief that Mr MacRae had not relinquished the power of appointment (see para C2(a) of the response), and to the paragraphs annexing the Deed Poll of Change of Trustee and the minutes of SMI's resolution. They also included objection to a paragraph stating on information and belief that Baylily had not provided periodic accountings or financial statements for the Trust. No doubt with a view to supporting the reasonableness of requiring proof of the resolution, the submissions referred to Mr Gorczyca's affidavit in which he deposed that the minutes of SMI's resolution annexed to Mr Mitchell's affidavit had not been in the applicants' discovery; further, prior to 4 March 2010 the respondents' solicitors had advised that the evidence then served (Mr Mitchell's first affidavit) was "not admissible on a final hearing for relief", had said that the authenticity of the Deed Poll of Change of Trustee and the SMI resolution had not been established, and had invited the applicants to "prove to the appropriate standard that those documents did come into existence on 13 November 2008 (or some other date)". 42The applicants' submissions said as to a separate question only that "in the event that the Court considered a separate determination of any or all of these matters to be warranted, this would not ultimately be opposed". The respondents' submissions included, without elaboration beyond reference to the need for finality, that - "7. The defendants support the Court dealing with the issues which arise in paragraphs C1 to C24 separately from and before all other issues in the case. This order should be made prior to the Court commencing upon the consideration of the Plaintiff's motion."

The primary judge's reasons 43The primary judge gave judgment on 12 March 2010. 44After some introductory matters, the primary judge set out at [13] as "[s]ome background to the plaintiffs' application" the whole of the reasons given by Harrison J when furnishing judicial advice (see the reference to the advice in the issues response). 45Under the heading, "Judgment on admissions", the primary judge said that the applicants' amended summons "made crystal clear" their claims in the nature of dispute section and the likely issues section. He set out Pt 17.7 of the UCPR. The issues response was set out at [17]. Nothing more was said of the significance of the issues response. 46Under the heading, "The defendants' position" the primary judge set out at [20] almost verbatim, with the interpolated description of the first paragraph of that position as "the conditional concession", the statement of the respondents' "position" in their written submissions. His Honour described it as the respondents' "forensic stance", and as set out it was - "i. The position is that subject to the matters referred to in the next paragraph being properly established, then Baylily and PLP will not contest that SMI is the trustee and will agree to orders (d), (d) and (f) sought in sub-paragraph 1 of the Plaintiff's Amended Notice of Motion. [The conditional concession] ii. Baylily and PLP have written in relation to their position concerning the plaintiff's motion. In summary form, the stated position was (and remains): a) Baylily and PLP do not accept (upon the evidence brought forward that the Deed of Change of Trustee nor the resolution by SMI was actually made on 13 November 2008. The authenticity of those documents has not been established. The resolution did not form part of the plaintiffs' discovery. No attempt has been made to prove the constitution of SMI. b) If SMI or Mr S MacRae prove to the appropriate standard that those documents did come into existence on 13 November 2008 (or some other date), and that they constituted valid resolutions, then they will be accepted. This has not been done. Moreover, if, for example, the deed did not come into existence on 13 November 2008, then the purported acceptance by SMI of the appointment cannot be of any effect. c) There is nothing in the plaintiffs' (admissible) evidence which supports these two matters. d) If the second plaintiff is unable to establish these matters, then PLP cannot be in a position to alter its register. iii. As to the remainder of the relief, the parties are at issue. This is: a) The making of declarations (sought in sub-paragraph 1(a), (b), and (c)). b) The making of an order for the taking of accounts (sought in sub-paragraph 1(g)) and the order for an amount due on the taking of such accounts (sought in sub-paragraph 1(h))." 47Then under the heading, "Scott MacRae Trust Deed" his Honour said that its terms threw up some "following matters". What followed repeated verbatim, save for the sub-paragraph lettering, what appeared in para 20 of the respondent's written submissions. Some of the "matters" were material to the application, although it is difficult to see the materiality of others. In part, the respondents appeared to be contending that, because of the terms of the trust deed, there was no "entitlement to account" unless "something more could be shown". A clearly material matter was - "ii. The Court was taken to the Appointment and Removal provisions in clause 7 of the Deed. Relevantly, clause 7(6) requires that SMI approve, by resolution, the appointment. Necessarily it is for the plaintiffs to demonstrate that the resolution was effective. Unless the constitution of SMI is put into evidence, the Court cannot be satisfied that the requirements of the Corporations Act as to the making of resolutions has been satisfied. The ASIC search merely discloses that SMI presently has one director. It does not disclose whether SMI is a sole director corporation." 48His Honour did no more than state the matters; neither under this heading nor elsewhere in the reasons were they identifiably taken up or considered. 49There then appeared the heading, "Outlining the plaintiffs [sic] general submissions and approach". The primary judge set out, again verbatim save for paragraph numbering, five pages from the applicants' written submissions in which the applicants canvassed the contentions and responses and referred to Mr Mitchell's affidavits. The references to the affidavits included reliance on paragraphs to which objection was taken in the respondents' subsequent written submissions. 50The extract from the written submissions ended, "There is also the evidence required by Rule 13.1(b): Mr Mitchell's second affidavit, par 15". This referred to the requirement in rule 13.1 for evidence of belief that the defendant had no defence to the claim. It was clear that the applicants' submissions extended to both judgment on admissions (rule 17.7) and summary judgment (rule 13.1). 51I set out the remainder of his Honour's reasons - " Decision 23 It is critical to appreciate that the power given to the court to grant judgment upon admissions is discretionary. However the Court is not bound to act upon them: see Termijtelen v V an Arkel [1974] 1 NSWLR 525, at 528F (per Hope JA), regard must be had "to all the circumstances of the case" (citing In re Wright ), at 529A. Moreover, it will not permit the applicant to supplement those 'admissions' with evidence ( Termijtelen at 528F, citing Wagstaff v Fitzpatrick (1922) 39 WN (NSW) 137). 24 The defendants have pressed upon the Court a finding that the admission referred to is not one which the Court is bound to accept as true. Their contention is that in fact it has not been proven and the knowledge of the relevant facts is not within that of Baylily or any other of the defendants. Their contention is that, at most, the admission was contingent upon an event which the plaintiffs have not seen fit to satisfy: the bringing forward of evidence to demonstrate the making of the appointment and the acceptance by SMI of the trusteeship. 25 The defendants' contention is further that the circumstances of the case, (especially the document in which the admissions are said to be found), indicate ambiguity and are in relation to matters (the making of declarations) upon which the Court must itself receive evidence. The proposition is that the plaintiffs claim to be in a position to prove their entitlements and do not resile (by the very structure of the Amended Motion, which includes resort to UCPR 13.1) from so doing. They contend that the plaintiffs should not be entitled to co-mingle their applications. 26 They further contend that on any view, the alleged admissions are insufficient to support the totality of the relief claimed in the Amended Notice of Motion. Decision 27 There is no doubt but that the decision on the plaintiffs' essential claims to relief is a difficult one in the current circumstances. There is a long line of authority in support of the proposition that declaratory relief is ordinarily granted as final relief in a proceeding. : In Warramunda Village Inc v Pryde [2001] FCA 61, (2001) 105 FCR 437, the Full Court of the Federal Court of Australia noted (at [8]): 'The remedy of a declaration of right is ordinarily granted as final relief in a proceeding. It is intended to state the rights of the parties with respect to a particular matter with precision, and in a binding way. The remedy of a declaration is not an appropriate way of recording in a summary form, conclusions reached by the Court in reasons for judgment. This is even more strongly the case when the conclusion is not one from which any right or liability necessarily flows.' The conditional concession 28 In relation to the conditional acceptance by the defendants that they will not contest that SMI is the trustee and will agree to orders (d), (e), and (f) sought in paragraph 1 of the plaintiffs' amended notice of motion, those orders will be made if the conditions are satisfied by the plaintiffs. 29 The principled exercise of the material discretion is for the court to formulate a separate question as a useful mechanism for finally disposing of all relevant issues arising as between the plaintiffs and the relevant defendants concerning the operation of the trust. This is an appropriate case in which the court should deal with the issues which arise in relation to paragraphs C1 to C24 separately from and before all other issues in the proceedings. 30 Whilst it is strictly unnecessary to go further and to deal with the application for summary judgment, is at least appropriate observe that the orders sought by the plaintiffs are properly characterised as final ones: see, for example 1(g) and (h) (considered in Meehan v Glazier Holdings Pty Limited (2002) 54 NSWLR 146, at [34] (per Giles JA; with whom Sheller JA and Beazley JA agreed). They correspond with the relief contained in the Amended Summons. Therefore, section 75 of the Evidence Act 1995 (NSW) has no application. The summary judgment application is also dismissed. The way forward 31 The parties are required to bring in short minutes of order. The orders will require that the defendants pay the plaintiffs' costs of the motion on an indemnity basis. The making of costs orders is a discretionary one. The current circumstances at the least indicate the type of delinquency emanating from the defendants conduct as to warrant this order 32 I accept that the plaintiffs are entitled to the relief sought in prayers 1 (d), (e) and (f) of the amended summons." 52In the reasons as published on 12 March 2010 the reference at [32] was to "prayers 1(a)-(e) of the amended summons". This was later corrected under the slip rule. The explanation in reasons given on 26 March 2010 was - "10. The forensic stance taken by the defendants was identified in paragraph 12 of the reasons where, in particular it was noted that Baylily and PLP would agree to orders D, E and F sought in subparagraph 1 of the plaintiff's amended notice of motion. The final paragraph of the reasons was intended to repeat that concession but instead of referring to orders D, E and F indicated that the plaintiffs were entitled to the relief sought in prayers 1A to E of the amended summons. This is a slip appropriate to be corrected hence the entitlement to relief there referred to will reflect what has been intended."

Subsequent events 53Competing short minutes were provided to the primary judge. 54The applicants' short minutes proposed declarations and orders to the effect of paras 1(a), 1(b), 1(c), 1(d) and 1(e) in the amended notice of motion, plus the order for indemnity costs. Presumably the declarations and orders were thought to be warranted by the then uncorrected [32] of the primary judge's reasons. They proposed an order that "all questions remaining on Paragraphs C1 to C24 of the Amended Summons ... be decided separately before any further trial in these proceedings". 55The respondents' short minutes proposed that the amended notice of motion be dismissed and left a costs order blank, and proposed that the questions set out in a schedule be determined separately and prior to any other question in the proceedings. The questions were - "In order to determine the issues raised by the contentions set out in paragraphs C1 to C24 inclusive of the Amended Summons -

1. Upon the proper construction of the Scott MacRae Trust Deed dated 12 December 2006 ('the Deed') was the First Defendant ('Baylily') duly removed as the Trustee of the Scott MacRae Trust ('the Trust')? If so, upon what date?
2. Upon the proper construction of the Deed, was the First Plaintiff ('SMI') duly appointed as the Trustee of the Trust? If so, upon what date?" 56In a manner not disclosed, the primary judge gave leave to put in further written submissions on costs. The respondents submitted that there was no basis for indemnity costs, and that the applicants should have been ordered to pay their costs. The applicants submitted that the indemnity costs order was "amply warranted". Each supported their submission over several pages. 57The proceedings came before the primary judge on 26 March 2010. He delivered reasons for maintaining the indemnity costs order, and also for making the correction under the slip rule. I will return to the reasons as to the indemnity costs order. 58His Honour then turned to the competing short minutes. At the request of counsel for the applicants, he made the indemnity costs order. The transcript continues - "GRANT: Thank you, Honour. The next question is your Honour as I understand it has indicated your Honour is not prepared to make any orders 1A to F as I sought in the motion, that's my understanding your Honours-- HIS HONOUR: Yes, because as was made clear on the last occasion and in my judgment there were conditional order and I accept the defendant's position as put last time and seems to me that one should move into a separate regime as soon as practicable." 59The applicants' counsel asked for an order in accordance with their short minutes, referring to [29] of the reasons of 12 March 2010 in which similar language to "the questions remaining on Paragraphs C1 to C24 of the Amended Summons" had been used. (Of course, it was now not a matter of remaining questions - none had been decided.) The primary judge turned to counsel for the respondents, who gave reasons for the orders they sought. His Honour said that he would "hear from your opponent", but after some more was said by counsel for the respondents he announced that he intended to make orders in accordance with the schedule in the respondents' short minutes. Counsel for the applicants asked, "Would your Honour hear me on that before your Honour does?". The answer was, "No, I won't". 60In due course an order for decision of separate questions was made in the terms proposed by the respondents.

Consideration of the primary judge's reasons of 12 March 2010 61With respect, the primary judge's reasons are unsatisfactory in a number of respects. 62First, while it is clear enough (save perhaps as to orders 1(d), 1(e) and 1(f) of the notice of motion, see below) that his Honour refused to give judgment on admissions pursuant to r 17.7, it can not be seen why. 63Was the implicit dismissal of the application for judgment on admissions because there were insufficient admissions to support the totality of the relief claimed, see [26]? If so, the applicants may have been entitled to less than the totality of the relief claimed. Was it in the exercise of a discretion, see [23]? If so, before the exercise of the discretion there should have been attention to the weight of the admissions or other matters going to whether it was appropriate to act upon them. Was it because the admissions were ambiguous, see [25], although [25] seems also to involve an asserted need for evidence before making declarations? Was it because "the admission referred to", although what the admission was is unclear, was contingent on evidence demonstrating the making of the appointment of the new trustee and the passing of the resolution, see [24]? These questions can not be answered. 64The difficulty in what the primary judge meant by "the admission referred to" in [24] is compounded by his Honour's reference at [28] to the respondents' conditional acceptance. On appeal, the applicants placed almost sole reliance on the issues response for their claim to judgment on admissions. The issues response did not have the same prominence at trial, but it was relied on, and was set out by the primary judge at [17]. It appears to have been supplanted in the primary judge's thinking by what he referred to as the conditional acceptance, plainly enough taken from the "position" in the respondents' written submissions set out at [46] above. They were not the same. The issues response was concerned with paras 1, 2, 3, 4 and 6 of the claims to relief in the amended summons, corresponding to paras 1(a), 1(e), 1(d), 1(b) and 1(c) of the relief claimed in the amended notice of motion, which on the applicants' case were admitted without qualification, and para 5 (para 1(f)). The conditional acceptance was concerned with paras 1(d), 1(e) and 1(f). The primary judge appears to have been diverted from consideration of the applicants' case by regard to the so-called conditional concession. 65In saying that it can not be seen why the primary judge refused to give judgment on admissions, on my understanding his Honour did not refuse simply because he had determined on a separate question mechanism. That would have made much of the reasons redundant, including the reference at [27] to the difficulty of "the decision on the plaintiff's essential claims". It also does not sit well with the apparent readiness to make orders expressed at [28], unless that is foreshadowing a result in the decision of a separate question; that, however, would depend on the conduct of the separate question and the evidence and submissions then in play. The applicants had applied for judgment on admissions (and summary judgment), and had resisted the decision of separate questions. Imposing the separate question mechanism on them could properly not be done without consideration of whether they were entitled to the relief claimed in their application and, at the least, explanation of why the deficiencies or difficulties of the application were such that the issues under paras C1 to C24 of the amended summons should be otherwise decided. 66It may be that his Honour was in part influenced by the correct understanding that a declaration should not be made simply to record a step to other relief, see [27]. But that was not a reason to decline the substantive relief claimed if satisfied that SMI had been duly appointed as new trustee, or if satisfied that there should be an accounting. The part played by [27] in his Honour's reasoning is obscure. 67The applicants' submissions canvassing the contentions and the response to them for admissions, although set out at length in the reasons, is not addressed at all. Nor is any deficiency in admissions identified in the expression of the decision. The reasons do not enable the reader, or even the parties with their knowledge of the proceedings, to know why the primary judge refused judgment on admissions and instead proposed the separate question mechanism. 68Secondly, the applicants had applied in addition or in the alternative for summary judgment under r 13.1. It appears that his Honour thought it unnecessary to deal with that application because he had determined upon the separate question mechanism, see [30]. He nonetheless gave brief reasons apparently intended to explain its dismissal. 69As with the application for judgment on admission, the applicants were entitled to a reasoned decision on their application for summary judgment. It was a live application, calling for consideration because the applicants relied on evidence to the extent that the admissions did not go far enough. And the reason for dismissal of the application for summary judgment, so far as its merits were addressed, has its own difficulties. 70It is implicit that the application for summary judgment was dismissed because evidence in the affidavits of Mr Mitchell was inadmissible, and that that was because s 75 of the Evidence Act did not apply so as to permit hearsay evidence where the source was given. The applicants accepted on appeal that the summary judgment application was not an interlocutory proceeding within s 75 (although Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22; (2002) 54 NSWLR 146 to which the primary judge referred is not relevant authority; it was concerned with an order for taking accounts made after a contested hearing). But Mr Mitchell's evidence was not addressed for what it sought to prove and for whether some parts were admissible. Appreciating that the primary judge was only making an observation, his Honour did not adequately deal with why the application for summary judgment should fail. 71Thirdly, there is an internal inconsistency, or at least obscurity. The primary judge said at [28] that he would make the orders in paras 1(d), 1(e) and 1(f) "if the conditions are satisfied by the plaintiffs", at that point in the reasons apparently declining to accept that the conditions were satisfied. The conditions his Honour had in mind appear to be proof of the appointment of SMI as new trustee on 13 November 2008, including proof of a resolution accepting the appointment, see at [24], although that also is not entirely clear. Without explanation, his Honour then said at [32] that he accepted that the applicants were entitled to those orders. 72It may be that the primary judge meant at [32] that the applicants were entitled to the relief if the conditions were satisfied; it may be that he had in mind satisfaction in the decision of a separate question. There is still an inconsistency or obscurity. The orders in paras 1(d) and 1(e) could not be made unless SMI had become trustee of the Trust in place of Baylily. If that were so, the declaration in para 1(a) may well have been apt in order to resolve this dispute: was it not mentioned because it was thought that it would only be a conclusion reached in reasons for judgment, see [27]? And if an account was taken (the order in para 1(f), although the reasons otherwise said almost nothing about the claim to relief by way of an accounting), why not an order that Baylily pay any amount found to be due on taking the account (the order in para 1(g))? 73Fourthly, a separate question mechanism was imposed, although opposed by the applicants, without proper explanation. I have referred to this above, and the following may be added. It was said to result from "[t]he principled exercise of the material discretion", see [29]. What was the discretion? It was not a discretion in the disposal of the applicants' application. What were the principles? They were not identified. Apart from imposition of the order, there were not adequate reasons. 74The primary judge had received little assistance in relation to decision of a separate question. As became apparent on appeal, and would no doubt have come out at trial had more full attention been given to the matter, the credit of Mr MacRae may have been in question at least in relation to the passing of the resolution by SMI on 13 November 2008 (as to which Mr Gorczyca's affidavit disclosed a basis for questioning its passing), and Mr MacRae's credit would arise in the balance of the proceedings. The applicants disclaimed any urgency in having decided the claims the subject of paras C1 to C24 of the amended summons. This was not a situation for a separate question mechanism. 75The later making of the order for decision of separate questions had a further difficulty. Until the competing separate questions were proposed, no consideration had been given to the formulation of a question or questions. On 26 March 2010 the primary judge refused to hear counsel for the applicants in opposition to the respondents' formulation of questions. There was a sound basis for resisting those questions. The dispute over whether SMI was appointed in place of Baylily as trustee of the Trust depended on what was done, not on the proper construction of the trust deed, and the questions were not apt for that dispute; and further, there were other issues involving the claimed accounting. Counsel for the applicants should have been heard. 76Regrettably, there was a denial of procedural fairness, and in any event the order made was not an appropriate order for resolving the claims founded on the contentions in paras C1 to C24 of the amended summons. Nor, for the reasons earlier given, should any order have been made for deciding those claims separately from the balance of the proceedings. 77I will come to the indemnity costs order later in these reasons.

Leave to appeal 78As will appear, in my opinion the application should have been dismissed, both as an application for judgment on admissions and as an application for summary judgment. The result below was in that respect correct. Ordinarily it might be expected that leave to appeal would be refused where the result was not clearly incorrect, let alone when it was correct. 79However, in the present case the disposal of the application was seriously flawed. The applicants have not had a decision which can be seen as a decision according to law. In brief, it is not possible to see why the primary judge refused judgment on admissions, his Honour did not deal with the application for summary judgment, and there is other inconsistency or obscurity in the reasons. In my opinion, leave to appeal should be granted and this Court should decide the application afresh. 80The order for decision of separate questions was flawed in its making, was inappropriate in its terms and should not have been made at all. If left undisturbed, it will set the parties on a wrong course. Leave to appeal should be granted in relation to that order also.

Were the applicants entitled to judgment on admissions? 81The submissions focussed on the appointment of SMI as trustee of the Trust in place of Baylily, with minor reference to an accounting by Baylily. It is sufficient to address those two matters.

(a) Appointment of new trustee 82The applicants' case on appeal was founded on the issues response, with some support sought from the document earlier mentioned. For the present I put the document aside. 83The applicants submitted that the sentence in the issues response stating that, following judicial advice, Baylily "does not seek to challenge paragraphs 1, 2, 3, 4 and 6 of the relief claimed" was a definitive admission of entitlement to that relief, and was shown to be so by the words in bold saying that the preceding sentences "dispose[d] of the first two paragraphs of the Plaintiffs' issues". (The applicants expressly did not seek judgment on admissions in relation to the claim in para 5 of the claims to relief in the amended summons, see the next sentence in the issues response.) 84Had the issues response stood alone, it could perhaps have been argued that the appointment of SMI as trustee of the Trust in place of Baylily had been admitted. The argument, however, would lack force, and in my opinion would fail. 85The statement that Baylily "does not seek to challenge paragraphs 1, 2, 3, 4 and 6 of the relief claimed" is in truth no more than a statement of Baylily's attitude and intention, consistently with which it required the applicants to establish the appointment of SMI as new trustee although it would not resist that endeavour or its result. That the statement is to be understood in that way is clear from the next sentence, explicitly making the non-challenge to the relief sought in para 5 of the claims to relief conditional upon SMI being "able to demonstrate that it has been validly appointed in place of Baylily as trustee of the relevant trust". Reading the two sentences together, the first can not be understood as the applicants submitted. 86The words in bold do not detract from this or call for a different reading of the issues response. Clearly the first two paragraphs of the applicants' issues were not conceded in the applicants' favour so far as proof of the appointment of SMI as new trustee was required for the relief sought in para 5 of the claims to relief. Understood in context, by the words in bold it was meant that the two paragraphs were disposed of in that there would not be resistance by Baylily; rather, Baylily would go quietly if the applicants demonstrated SMI's appointment. This was less than admission of an entitlement, or of the facts on which an entitlement was based. 87The issues response was in terms that of Baylily alone. As earlier noted, PLP was a respondent to the claim in para 5 of the claims to relief, in which relief was sought directly against it which depended upon the change of trustee. On any view, the issues response did not entitle the applicants to judgment on admissions for the relief claimed against PLP. 88The issues response does not stand alone. The effect of paras C4 and C5 of the response is that the applicants are put to proof of at least a valid resolution by SMI consenting to become the new trustee; probably also of Mr MacRae's power of appointment, since the terms of the trust deed are not admitted, and of his retention of the power of appointment. The Commercial List response must be read as a whole, and when so read it is not possible to see the issues response as an admission sufficient for the claims in paras 1, 2, 3, 4 and 6 of the claims to relief. 89The document from which the applicants sought support was a letter from Queensland solicitors, said to be Baylily's solicitors, enclosing an undated transfer of land in Queensland from Baylily "as trustee under instrument 16953037" to SMI "as trustee" for the consideration, "In order to reflect the change of name of the trustee by deed dated 13 November 2008". (The letter and transfer were annexures to Mr Mitchell's second affidavit, subject to a s 75 objection. It is not easy to see why objection was taken; however, the applicants made a like submission with respect to the document as with respect to the minutes of the SMI resolution, see below. For the present this may be passed over.) 90The applicants submitted that this was an informal admission of the appointment of SMI as new trustee. Counsel for the applicants correctly described it as providing "only a smidgin" of support. It could not found judgment on admissions. 91An admission must be clear if it is to found a judgment: Ellis v Allen (1914) 1 Ch 904 at 909; Ash v Hutchinson & Co (Publishers) Ltd (1936) Ch 489 at 503; perhaps surprisingly, there is no evident recent authority, but the proposition was not in dispute. There was not a clear admission either that SMI was validly appointed as trustee of the Trust in place of Baylily, or of the facts necessary for coming to that conclusion; indeed, the issues response is not an admission at all. In my opinion, the applicants are not entitled to declarations or orders resting on appointment of a new trustee by way of judgment on admissions.

(b) Accounting 92On appeal, counsel for the applicants acknowledged that there was no basis for judgment on admissions in relation to the orders in paras 1(g) and 1(h) of the amended notice of motion "because there was no admission of entitlement of any sort to that relief". This was a correct concession.

Were the applicants entitled to summary judgment? 93It is sufficient to address the same two matters.

(a) Appointment of new trustee 94The first affidavit of Mr Mitchell annexed the trust deed, which was not objected to. The relevant clauses were in evidence, and the Deed Poll of Change of Trustee was effectively admitted by Baylily (but not by PLP) in para C4 of the response subject to proof of SMI's resolution accepting appointment. The Deed Poll annexed to Mr Mitchell's affidavit was subject to a s 75 objection, it seems because in the relevant paragraph Mr Mitchell said that he was informed by Mr MacRae that the signature was his and that he signed it on 13 November 2008. It is not easy to reconcile the objection with para C4 of the response, save perhaps as an objection taken by PLP. 95The outstanding issues were whether Mr MacRae had relinquished his power of appointment (cl 7(2) of the trust deed), possibly proof of the Deed Poll of Change of Trustee as against PLP, and proof of SMI's resolution. The submissions scarcely went beyond the last of these, and it is not necessary to go beyond it. 96As I have said, Mr Mitchell's first affidavit annexed a copy of minutes of a resolution of SMI. The relevant paragraph read - "11. Annexed and marked 'E' is a copy of Minutes of a Meeting of Sole Director dated 13 November 2008. I am informed by Scott [Mr MacRae], and believe, that: (a) it is his signature that appears above the words ' Name: Scott MacRae Director ' on Annexure 'E', which he signed on 13 November 2008; and (b) Annexure 'E' is a true and correct record of the Minutes of a Meeting of Sole Director of SMI held on 13 November 2008." 97There was evidence that Mr MacRae was the sole director of SMI, although as pointed out in the respondents' written submissions before the primary judge there was no evidence of SMI's constitution. 98It was accepted on appeal that the respondents' s 75 objection precluded admission of para 11 of Mr Mitchell's affidavit and annexure E so far as Mr Mitchell gave evidence on information and belief. The applicants submitted that the annexure was nonetheless admissible as a business record. They said that they had not had the opportunity to respond accordingly to the respondents' objection. 99With full appreciation of the pressures of deciding applications made in the Commercial List, it would have been better to receive the affidavits in open court and make provision for answering to the respondents' objections. But the applicants had had the opportunity to respond, in that they could have asked the primary judge to receive supplementary submissions in answer to the respondents' objections. Be that as it may, the applicants' submission should not be accepted. 100As a general statement, the hearsay rule does not apply to a business record. The detail is found in s 69 of the Evidence Act . It applies to a document which forms or has formed part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business (s 69(1)(a)), and which contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business (s 69(1)(b)). The hearsay rule does not apply to the document so far as it contains the representation if the representation was made, so far as presently relevant, by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact (s 69(2)). 101It was necessary to show that the annexure, the (copy) minute of SMI's resolution, was a business record. That it was a copy may be put aside, see s 146 of the Evidence Act . But it did not prove itself; it was just a piece of paper. Mr Mitchell could only speak of its status as a business record on information and belief (as he did, up to a point). Other evidence was necessary to establish the authenticity of the minute, and that it was indeed part of the records of the business of SMI. Inferences could be drawn from examination of the annexure and "other matters from which inferences may properly be drawn" ( Evidence Act , s 183), but the applicants relied on nothing beyond the document itself. In my opinion, that is insufficient, particularly in the light of Mr Gorczyca's evidence that the minute of the resolution was not in the applicants' discovery and of the failure to respond to the invitation to provide direct evidence. 102This necessary element for summary judgment was not proved. For that reason alone, the applicants are not entitled to summary judgment in respect of declarations or orders resting on appointment of a new trustee. So far as the applicants relied also on the letter from the Queensland solicitors and transfer earlier mentioned, they do not overcome the deficiency.

(b) Accounting 103At least on appeal, at one point the applicants submitted that if SMI was appointed as new trustee the orders in para 1(g) and 1(h) of the amended notice of motion would "follow as a matter of course". No authority was cited, and counsel did not show enthusiasm for the submission. It is not necessary to consider its validity, because its premise has not been established. 104In the course of later debate the applicants accepted that the orders in paras 1(g) and 1(h) were sought "as incidental to the others in a Pt 17 and Pt 13 application". On my understanding, they did not seek the orders independently of success in their summary judgment application in relation to the appointment of SMI as trustee of the Trust in place of Baylily.

The order for decision of separate questions 105At the hearing on appeal the respondents did not seek to maintain the or any order for decision of separate questions. The applicants submitted that if their application failed, an order should be made in place of that made by the primary judge, in the terms of the order they had proposed in March 2010. For reasons earlier given, no order at all should have been made, and an order should not now be made.

Indemnity costs 106The initial ruling that the respondents should pay costs on an indemnity basis was made in [31] of the primary judge's reasons of 12 March 2010, set out at [51] above. 107The applicants' notice of motion had asked for an order that Baylily and PLP pay their costs of and incidental to the motion and the claims in paras C1 to C24 of the amended summons on an indemnity basis. Nothing was said about costs in the course of the hearing on 5 March 2010. 108The applicants' written submissions of 8 March 2010 said as to costs only - "68. Given the opposition to the plaintiffs' claims, not only prior to the commencement of proceedings on 9 July 2009, but even after the filing of the Amended Response on 31 January 2010 (and at the subsequent directions hearing before Hammerschlag J: see Mr Mitchell's Second Affidavit, pars 16-20), the Plaintiffs should have their costs on the indemnity basis in accordance with Prayer 3 of the Amended Motion." 109The respondents written submissions of 9 March 2010 said - "45. The plaintiffs should pay personally (and without recourse to any trust fund) the defendants [sic] costs of the plaintiff's motion. 46. If the defendants are unsuccessful, it is submitted that there is no basis for a costs order against the defendants in any event. This is on the basis that: (a) The Amended Notice of Motion was brought with undue haste and before meeting the defendants' request that the plaintiffs establish their claim on a final basis. The persistence of the plaintiffs in seeking this relief made it necessary for the defendants to defend the motion. (b) In any event, in most instances, the claims in paragraphs C1 to C24 of the Amended Summons have been admitted by Baylily in the response to the Amended Summons. (c) The declarations sought are really not required, are inutile, or otherwise inappropriate having regard to the remainder of the proceedings. The persistence of the plaintiffs in seeking this relief made it necessary for the defendants to defend the motion." 110In the reasons of 12 March 2010 the primary judge refused to give judgment on admissions or summary judgment, and the applicants' application wholly failed. Yet the respondents were ordered to pay the costs of the application, and were ordered to pay them on an indemnity basis. 111The only explanation in the reasons of 12 March 2010 was that "[t]he current circumstances at the least indicate the type of delinquency emanating from the defendants [sic] conduct as to warrant this order" (at [31]). The current circumstances were not identified. What was meant by "at the least" was left unclear. The type of delinquency "emanating from" the respondents' conduct was not identified, nor even the conduct. 112A costs order against a successful party will not ordinarily or lightly be made, and if such an order is to be made, and the more so if it is to be made for costs on an indemnity basis, an adequate explanation of the reasons for it should be given. With respect, this was not done. 113As I have indicated, the primary judge received further written submissions as to costs and gave a further judgment concerning costs on 26 March 2010. 114After saying that there was no doubt that the Court had jurisdiction to make an order for costs on an indemnity basis in appropriate circumstances, referring to Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, Degmam Pty Ltd (In Liquidation) v Wright (No 2) (1983) 2 NSWLR 354 and Re Smith; Ex parte Rundle (No 2) (1991) 6 WAR 299, his Honour said - "7. The defendants' conduct in pleading its commercial list response to the amended summons in section (A) at paragraph 1 in the terms noted in the reasons [at 17] and thereafter challenging that unequivocal concession warrants the order for indemnity costs. 8. As the High Court of Australia has recently made clear in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, at [90]-[93]: 'The overriding purpose of [the material section] to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense, is stated in the rules of other courts in Australia, although those purposes and the obligations cast upon the court and the parties may be stated in somewhat different terms. ... The purposes stated in r 21 reflect principles of case management by the courts. Such management is now an accepted aspect of the system of civil justice administered by courts in Australia. It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process. In its report in 2000, Managing Justice: A review of the federal civil justice system , the Australian Law Reform Commission noted that: "Over the last ten years Australian courts have become more active in monitoring and managing the conduct and progress of cases before them, from the time a matter is lodge to finalisation." Rule 21(2)(b) indicates that the rules concerning civil litigation no longer are to be considered as directed only to the resolution of the dispute between the parties to a proceeding. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the court and upon other litigants. In Sali v SPC Ltd Toohey and Gaudron JJ explained that case management reflected: "[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard ... " 9. I am quite clear that the instant circumstances warrant the making of an order that the defendants Baylily and PLP pay the indemnity costs of the plaintiffs in respect of the material notice of motion. So much is plain from the matters referred to in paragraph 17 of the 12 March Judgment. Parties to proceedings are required to take very special care before making concessions and the plaintiffs were perfectly entitled to regard the matters referred to in paragraph 17 of the earlier Judgment as disposing of the first two paragraphs of the plaintiffs' issues. Litigation is not a game. There is no room for fudging. The fact that ultimately the plaintiffs did not succeed on the motion in these present, most unusual, circumstances should not divert attention from the essential problem with the defendants' form of dealing, in their commercial list response to the amended summons." 115The "unequivocal concession" to which his Honour referred at [7] was the issues response, which had been set out at [17] of the reasons of 12 March 2010. There is no indication in his Honour's reasons of 12 March 2010 that he regarded it as an unequivocal concession. It did not lead, as one might have expected an unequivocal concession would have done, to some relief by way of judgment on admissions, even if not all the relief claimed. As earlier suggested, it appears to have been overtaken in his Honour's thinking by the conditional concession, and it did not suffice for satisfaction of the conditions of the "conditional acceptance" (at [28]). 116With respect, there is disconformity between the primary judge's disposal of the application in his reasons of 12 March 2010 and the reasons for maintaining the indemnity costs order given on 26 March 2010. 117It is not necessary to say more of the basis for the indemnity costs order. For the reasons earlier given, the issues response was not an unequivocal concession. It was not well expressed, but the respondents defended the application broadly in conformity with their Commercial List response and not in a way deserving of the criticism made by the primary judge. The applicants were not entitled to the relief claimed by way of judgment on admissions or summary judgment. Allowing the indemnity costs order to stand would be a grave injustice, and leave to cross-appeal should be granted and the cross-appeal allowed.

Costs 118The costs of the application before the primary judge should follow the event of failure of the application, subject to consideration of whether the respondents' issues response misled reasonably acting applicants into an ultimately unsuccessful application. That could bring alleviation of an order for costs against the applicants. 119I do not think that it did. On a reasonable reading, in itself and when the Commercial List response is read as a whole, the issues response was not an admission on which judgment by admissions for even the claims in paras 1, 2, 3, 4 and 6 of the claims to relief in the amended summons could be obtained. At the least, the passing of SMI's resolution was put in issue, as was explained also by the respondents in correspondence albeit close to the hearing date of 5 March 2010. There was even less of a basis for seeking judgment on admissions in relation to the other substantive claims. So far as the applicants applied for summary judgment relying on Mr Mitchell's affidavits in addition to admissions in the Commercial List response, they were put on notice that objection would be taken to evidence on information and belief, and were invited to put on direct evidence. They did not do so, and on the central matter of the passing of the SMI resolution that has been a fatal deficiency. 120In my opinion, the applicants should be ordered to pay the costs of the application. 121As to the costs on appeal, both the applicants and the respondent as cross-applicant have obtained leave to appeal. Each of the respondents and the applicants sought to uphold the result against which the others appealed, although the respondents at the last did not seek to uphold the order for decision of separate questions. The applicants have succeeded in overturning the order for decision of separate questions, but not in obtaining a different order. Although they made valid complaints about the primary judge's dealing with their application, they did not achieve a different result. The respondents have succeeded in overturning the indemnity costs order. In substance the applicants have failed. 122The respondents added to this that in late 2010 the Commercial List list judge offered the parties an early date for a hearing of the whole proceedings, but the applicants declined the offer. Implicit in the offer was that the decision of the separate questions would be unnecessary. The respondents submitted that the questions of judgment on the claims the subject of paras C1 to C24 of the amended summons and decision of separate questions were unnecessarily brought on appeal, whereby the applicants should be ordered to pay their costs on appeal. 123The applicants agreed that the offer of an early date was made, and said that they declined it because the proceedings could not be brought to readiness for the offered date in February this year. We are not in a position to determine whether for that reason the applicants justifiably declined the offered date, but the point of the respondents' submission largely remains. Even if that date could not be taken, one would expect that a date could have been given for a hearing of the whole proceedings as soon as they were ready for hearing. 124The difficulty in the applicants' stance lies deeper. There was no utility in the application. It should be repeated that the respondents disclaimed any urgency in having decided the claims the subject of paras C1 to C24 of the amended summons. When asked, counsel for the applicants said that the only point of the application was that they should not have to pay the costs of "running a hearing" when they had admissions. A moments thought shows the flaw in this. If there were admissions, or even if the admissions were supplemented with brief evidence as on a summary judgement application, there would be minor incremental costs at a hearing of the whole proceedings. Instead, there have been the greater costs of a separate application, and then costs on appeal, and the application has been found wanting quite apart from its inutility. There is like inutility in decision of separate questions, indeed good reason against such a course. 125In my opinion, it should be ordered that the applicants pay the respondents' costs on appeal.

Orders 126The formal orders made by the primary judge did not include an order dismissing the amended notice of motion, although an order dismissing the application for summary judgment was expressed in the reasons of 12 March 2010. Order 2 below reflects this informality. Procedural orders were made consequential on the order for decision of separate questions. The time for acting on them has expired, and there is no point in setting them aside. 127It is noted that the respondents' costs do not include the costs of preparing the red, combined and orange books. 128I propose the orders -

1. Grant leave to appeal and direct that the notice of appeal be filed within seven days.
2. Appeal against the disposal of the amended notice of motion filed on 5 March 2010, other than against order 2 made on 26 March 2010, dismissed.
3. Appeal against order 2 made on 26 March 2010 allowed.
4. Order that order 2 made on 26 March 2010 be set aside.
5. Grant leave to cross-appeal and direct that the notice of cross-appeal be filed within seven days.
6. Cross-appeal allowed.
7. Order that order 1 made on 26 March 2010 be set aside, and in lieu thereof order that the plaintiffs pay the costs of Baylily and PLP of and incidental to the amended notice of motion filed on 5 March 2010.
8. Order that the applicants/appellants pay the respondents' costs of the applications for leave and of the appeal and cross-appeal. 129HODGSON JA: I agree with the orders proposed by Giles JA and with his reasons. I would add the following comments. 130The Commercial List response filed by the respondents was not well or clearly drafted; but it could not reasonably be read as containing formal admissions of the applicants' entitlement to any orders. 131As pointed out by Giles JA, the non-challenge, in the statement of issues likely to arise, to the relief sought in par 5 of the relief claimed, was explicitly conditional on SMI demonstrating it had been validly appointed. But if the relief claimed in pars 1 to 4 and 6 were obtained by the applicants, that relief would be conclusive of the fact that SMI had been validly appointed, and thus that the explicit condition was satisfied. 132The conclusion from this, that there was not intended to be a formal admission of the applicants' entitlement to the orders claimed in pars 1 to 4 and 6, is confirmed by par 5 of the respondents' answers to the applicants' contentions, which clearly enough put the applicants to proof of the making of the resolution of SMI's directors approving its appointment as new trustee. 133Accordingly, the application for judgment on admissions was correctly dismissed. 134As regards the application for summary judgment, this required at least proof that the resolution of SMI's directors had been made. 135The applicants accepted that the proceedings were not "an interlocutory proceeding" for the purposes of s 75 of the Evidence Act 1995; and in my opinion this is correct. For reasons given by Campbell J in King Investment Solutions v Hussain [2005] NSWSC 1076 at [22] - [26], a judgment obtained by a plaintiff as a result of a summary judgment application is a final order; so in my opinion, if such an order is made, the proceedings pursuant to which it is made cannot be considered interlocutory. 136This has the perhaps curious result that the nature of the proceedings may depend on their outcome: if a summary judgment application is dismissed, there is no final order and the proceedings on that application are presumably interlocutory. However, in the course of such proceedings, evidence which must be relied on by the plaintiff if a summary judgment is to be obtained can appropriately be treated as evidence tendered in proceedings that are not interlocutory. 137If that view were wrong, there would appear to be no discretion under s 75 to reject hearsay evidence, so long as the source is identified; but there would still be the general discretion to reject it under s 135 of the Evidence Act . Further, a court has a discretion whether or not to give summary judgment under Uniform Civil Procedure Rules 2005 r 13.1; and if a plaintiff relies on hearsay evidence concerning an important contested issue, where objection is taken to this and direct evidence could have been given but is not (without any explanation), it would in my opinion be a sound exercise of discretion not to grant summary judgment. 138In the present case, the applicants sought to overcome this difficulty by seeking to rely on the (copy) minute of SMI's resolution as a business record. I accept that, even without evidence of their source, some documents can of themselves support an inference that they form or have formed part of the records of the business. This was not so for the (copy) minute: it was simply a typed document (or rather a document prepared on an ordinary word-processing computer) bearing a signature said, on information and belief only, to be a director's signature. 139I agree with Giles JA that the application for judgment on the admissions or for summary judgment had no utility; and in my opinion it bears the appearance of an attempt to gain a tactical advantage on the basis of a Commercial List response that was not well drafted. I agree also that there was no utility in the decision of separate questions, particularly where Mr MacRae's credibility is likely to be an issue in the main proceedings, and also could possibly come into question in any determination of separate questions.

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