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.