Storehouse Managed Investments Limited v Perpetual Nominees Limited

Storehouse Managed Investments Limited v Perpetual Nominees Limited - [2016] NSWCA 252 - NSWCA 2016 case summary — Zoe

Judgment

THE COURT: The applicant, Storehouse Managed Investments Limited (Storehouse), seeks leave to appeal from the order made by Brereton J on 17 December 2015 that Storehouse pay the costs of the respondents Perpetual Nominees Ltd and the Trust Company (Nominees) Ltd, upon the respondents' discontinuance of proceedings against Storehouse, and his Honour's further order that Storehouse not be entitled to have recourse to trust assets by way of indemnity in respect of the costs order.
As Storehouse's summons seeking leave to appeal was filed out of time, it seeks an extension of time in which to file the summons. It is convenient to deal with that question first.
On 17 December 2015, the primary judge gave an ex tempore judgment and made the orders as to costs, to which reference has already been made. Those orders were entered on JusticeLink, the Court's computerised record system, on that day. Pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.11, unless the Court orders otherwise, a judgment or order is taken to be entered when it is recorded in that system. As the Court did not order otherwise, his Honour's orders are taken to have been entered on 17 December 2015. A written version of his Honour's ex tempore judgment was made available to the parties on 22 January 2016.
On 19 February 2016, Storehouse filed a notice of intention to appeal. That notice was served on the respondent on 25 May 2016. Pursuant to UCPR, r 51.8 a notice of intention to appeal must be filed and served within 28 days after the material date. The term "material date" is defined in UCPR, r 51.2. On the application of any of paras (a) to (e) of the definition of "material date", the material date in this matter was 17 December 2015.
The 28 day period for filing a notice of intention to appeal, and for service of that notice, expired on 14 January 2016. The notice of intention was, therefore, filed 36 days out of time and was served more than four months after the time prescribed by UCPR, r 51.8.
The summons seeking leave to appeal was filed on 8 June 2016. The summons nominated 22 January 2016 as the material date. This was undoubtedly a reference to the date on which a copy of the reasons was provided to the parties. As already stated, the material date was 17 December 2015.
Pursuant to UCPR, r 51.9 the time for filing a summons in circumstances where a notice of intention has been filed and served is three months from the material date. In this case, the summons was required to be filed by 16 March 2016. Accordingly, the summons was filed approximately two and a half months out of time.
No supporting affidavit was filed by Storehouse in respect of the application for an extension of time until the hearing of the matter today, when Storehouse's solicitors filed in court an affidavit of Warwick John van Ede sworn 15 August 2016. The affidavit, it appears, was prepared after the receipt of correspondence from the Court, pointing out the absence of any supporting affidavit evidence.
In the affidavit, Mr van Ede deposes to two matters: first, that the primary judge gave an ex tempore judgment on 17 December 2015, and secondly, that written reasons had become available on 22 January 2016. The significance of the latter of these two matters was presumably to seek to establish that the material date was 22 January 2016, or perhaps to explain the delay.
Mr van Ede also annexed two documents to his affidavit. The first was a letter dated 29 March 2016 from the respondents' solicitors, seeking the payment of costs pursuant to his Honour's order made on 17 December 2015. The second annexure, which was a letter dated 15 August 2016 signed by three directors of Storehouse, addressed to "The Court of Appeal, NSW", was objected to and not read by Mr van Ede.
The affidavit does not explain the delay in filing either the notice of intention to appeal or the summons for leave to appeal. The delay is not insubstantial and the grant of an extension of time is opposed by the respondents. Given the requirements imposed by the Civil Procedure Act 2005 (NSW), ss 56- 60, the Court is generally disinclined to extend the time unless it is persuaded that there is some real injustice. There can be no injustice if leave to appeal would not be granted in any event: see generally Richards v Cornford (No 3) [2010] NSWCA 134 at 98-110; Daily Examiner Pty Ltd v Mundine [2012] NSWCA 195 at 154-155.
There was no evidence before the Court as to any relevant injustice to Storehouse, other than the argument presented by Mr van Ede on the summons seeking leave to appeal, to which we shall refer below. There was no explanation for the delay except for the suggestion that Storehouse did not know the quantum of costs claimed until it received a letter from the respondents' solicitors on 29 March 2016, a date which was after the date on which the summons for leave to appeal was required to be filed in accordance with the rules.
The failure to file the summons for leave to appeal until 8 June 2016 remains unexplained and there was no apparent connection between receipt of the letter of 29 March 2016 and the delay in filing the summons. Accordingly, unless the applicant could establish either that the merits of the matter were such, or that there was some other reason, the Court should nonetheless exercise its discretion and extend the time for filing of the summons for leave to appeal, leave should not be granted.
At the time the proceedings between the parties were commenced, Perpetual Nominees was the sole unit holder in the Storehouse Property Investment Trust, of which Storehouse was the trustee or responsible entity. Perpetual Nominees was the successor in title to The Trust Company (Superannuation) Ltd of the units in the trust, having purchased the units from that entity for valuable consideration in March 2015.
Commencing in April 2014, The Trust Company (Superannuation) Ltd, prior to Perpetual Nominees' acquisition of the units in the trust, had made a number of requests of Storehouse to relinquish control of the trust either by winding up the trust by transferring the entirety of the assets in specie to it, or by retiring as trustee and appointing a nominee of The Trust Company (Superannuation) Ltd in its place. In the face of Storehouse's failure to do so, or to make an interim distribution, proceedings were commenced seeking orders which included that Storehouse make an interim distribution of assets of the trust, that it give effect to cl 27 of the trust constitution which gave the trustee a discretion to make an in specie distribution of assets, and that it be replaced as trustee.
Two weeks before the matter was set down for hearing, Storehouse provided audited accounts to Perpetual Nominees, as well as a transfer of the units in the trust. The primary judge, at [22], considered that Perpetual Nominees had "thus secured the substantive result that it sought to achieve in the proceedings". Notwithstanding that the respondents were seeking leave to discontinue the proceedings, costs were sought on the contention that the ultimate transfer of most of the units in the trust represented a capitulation by Storehouse to the relief sought from the outset.
The primary judge, at [29], concluded that the respondent beneficiary, that is, Perpetual Nominees, was faced with a trustee whose recalcitrance was the real cause for the institution and prosecution of the proceedings. His Honour articulated five reasons that led him to that conclusion. In summary, those reasons were as follows. First, the proceedings had only been commenced in circumstances where the trust having been terminated, nothing had been done to progress the realisation or distribution of the trust assets, and repeated requests for a transfer of the assets had been declined.
Secondly, although Perpetual Nominees did not have a right to a transfer of the assets in Storehouse, the trustee had a discretion to transfer in specie and that in circumstances where the trust assets were illiquid, it was difficult to see that there was a proper discretionary basis to refuse to transfer the assets to Perpetual Nominees as the sole beneficiary.
Thirdly, even if Perpetual Nominees was not entitled to a final distribution until an audit was completed, there was no apparent obstacle to an interim distribution. Next, there was nothing in the trust constitution that required Storehouse to act in the manner which it chose to act in refusing or failing to make even an interim distribution, nor had Storehouse identified any risks associated with acceding to the beneficiary's requests to transfer the units. Finally, although Storehouse notified Perpetual Nominees by letter dated 28 July 2015 that it was intended to declare an interim position by 15 August that would enable a distribution of assets in kind to be done on an interim basis, that did not materialise as foreshadowed.
Storehouse filed a summary of argument which, in effect, replicated the proposed grounds of appeal, should leave to appeal be granted. In that summary of argument, Storehouse contended that leave to appeal should be granted on a number of bases, including on the basis that his Honour had made erroneous findings of fact. There was no material before the Court that established that the impugned findings were wrong. It is difficult to see, in any event, how a wrong identification of a beneficiary, as was alleged in para (5) of the summary of argument, had that been established, impacted upon the reasons his Honour gave for making the costs order against Storehouse.
In para (6) of the summary of argument, Storehouse contended that his Honour erred in finding that claims by Storehouse against the beneficiary would not be of benefit to the beneficiary. However, as the respondents pointed out, as at the relevant time The Trust Company (Superannuation) Ltd was the beneficiary, a claim against it would not be of benefit to it. Indeed Storehouse's argument involved a circularity that proved that it was pointless.
The respondents argued that the matters advanced in certain of the subparagraphs of paras (7), (8), (12) and (13) were not argued before the primary judge. Storehouse accepted that this was so, but continued to rely upon para (7)(a) and (h), para 8(a) and (e), and para (9). Mr van Ede submitted to the Court that the basis of Storehouse's argument in respect of those paragraphs, as well as in respect of paras (5) and (6), was that there was no evidence to enable his Honour to make the findings or the conclusions which were challenged.
Mr van Ede also informed the Court that Storehouse did not rely upon paras (10) to (13) of the summary of argument. So, in short, the only point advanced was that his Honour's reasons, to the extent that they were challenged, were not supported by evidence. However, as is clear from the transcript of the costs argument before the primary judge on 16 and 17 December 2015, both parties proceeded on the common assumption that material in the court books that were before his Honour and to which reference was made in the respondents' chronology, and further in oral argument, was before his Honour by way of evidence.
In addition to the respondents' reliance upon material in the court book, Storehouse also handed up a chronology and documents which, as counsel put it, were to "fill in the missing gaps". It is clear that his Honour accepted this common approach. The fact that there was no formal marking of the documents either in the court books or that were handed up on behalf of Storehouse as exhibits did not deprive them, in the circumstances here, of their evidentiary status. It followed that Storehouse's only argument, that is, the lack of evidentiary support for his Honour's findings, was not made out.
Accordingly, the Court is not satisfied that an extension of time should be granted. In reaching that conclusion, we have taken into account the absence of merit in the summons for leave to appeal. Accordingly, the Court refuses the application to extend the time for filing the summons for leave to appeal.

[4]

Costs

After the Court announced the order it proposed to make, it heard argument on the question of costs.
The Court proposes to make the indemnity orders sought by the respondents and the ancillary order. The Court considers it appropriate to make an order for indemnity costs, in circumstances where an extension of time for filing of the summons for leave to appeal was required and no explanation for that delay was proffered to the Court, nor was it established that there was any injustice to Storehouse were an extension of time not granted.
In addition, in the course of argument, the substantial portion of Storehouse's argument was abandoned. This is relevant not only because the argument was abandoned, but because the grounds in the draft notice of appeal closely replicated the arguments advanced in the summary of argument. The effect therefore was that the proposed draft notice of appeal was also substantially abandoned. When the matter came before the Court today, Storehouse's solicitor clarified that the basis upon which Storehouse contended that leave to appeal ought to be granted was that there was no evidence to support his Honour's impugned findings both of fact and law.
However, as the transcript of the proceedings before his Honour clearly revealed, and as we have already explained, there was evidence before his Honour in circumstances where the matter proceeded on an agreed basis of reliance upon documents in the court books and in additional documents which were handed up to his Honour. The respondents submitted that in all of those circumstances, the application was unreasonably brought.
It is relevant, in our opinion, when considering this application, that Storehouse had been on notice of the respondents' contentions since 6 July 2016 when its summary of argument was filed and in which it was clearly pointed out that there were difficulties in the case sought to be advanced by Storehouse.
For those reasons, we make the following additional order. The applicant is to pay the respondents' costs, on an indemnity basis, of the summons seeking leave to appeal and the application for an extension of time in which to bring that summons. The applicant is not entitled to have recourse to the assets of the Storehouse Property Investment Trust by way of indemnity for the costs so ordered by this Court, nor is it to have recourse to the assets of the Storehouse property investment trust for its own costs of the proceedings in this Court.

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Judgment (6 paragraphs)

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