Allman Properties (Australia) Pty Ltd v Expocourt Pty Ltd & Ors [1990] QSC 374

10 20 30 40 50 IN THE SUPREME COURT OF QUEENSLAND IVIL JURISDICTION No. 62 of 1990 BEFORE MR. JUSTICE McPHERSON S.P.J. BRISBANE, 9 NOVEMBER 1990 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: ALLMAN PROPERTIES (AUSTRALIA) PTY. LTD. -and- EXPOCOURT PTY. LTD. (AS TRUSTEE OF THE EXPOCOURT UNIT TRUST) -and- BANDANA INVESTMENTS PTY. LTD.(AS TRUSTEE) -and- STOKARE PTY. LTD. (AS TRUSTEE) -and- YELNAM PTY. LTD. (AS TRUSTEE) JUDGMENT Plaintiff Defendant First Third Party Second Third Party Third Third Party HIS HONOUR: I have been unable to work out from the material filed whether the notice of appeal was formally served,and on what date on the Respondent Third Party solicitors, though it is evident that by 26 October 1990 or thereabouts they· had becane aware of the appeal. For that reason I think the.simplest way of dealing with that aspect of the appeal is . to dispemse with _ :: . service of the notice of appeal. 10 20 30 40 50 w w -Govt. Printer, Qld. 1 -- 1 of 14 -- 10 20 30 40 50 60 As to the substance of the matter, I dismiss with costs the appeal against the order of the Master made on 9 October and I publish·my reasons. -Govt. Printer, Qld. 2 10 30 40 50 60 -- 2 of 14 -- IN THE SUPREME COURT OF QUEENSLAND No. 62 of 1990 Before Mr Justice McPherson S.P.J. BETWEEN: AND: AND: AND: ALLMAN PROPERTIES (AUSTRALIA) PTY. LTD. EXPOCOURT PTY. LTD. (AS TRUSTEE OF THE EXPOCOURT UNIT TRUST) BANDANA INVESTMENTS PTY. LTD. (AS TRUSTEE) Plaintiff Defendant First Third Party STOKARE PTY. LTD. (AS TRUSTEE} Second Third Party YELNAM PTY. LTD. (AS TRUSTEE} Third Third Party JUDGMENT - McPHERSON S.P.J. Delivered the Ninth day of November, 1990 Counsel: Lyons Q.C., with Laurie for the Appellant Couper for the Respondent Solicitors: Patrick T. Murphy t/a for Barry Bateman Clapin, Cleveland, for the Appellant Gadens Ridgeway for the Respondent Hearing Date: 2 November, 1990. -- 3 of 14 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AND: AND: AND: No. 62 of 1990 ALLMAN PROPERTIES (AUSTRALIA) PTY. LTD. EXPOCOURT PTY. LTD. (AS TRUSTEE OF THE EXPOCOURT UNIT TRUST) BANDANA INVESTMENTS PTY. LTD. (AS TRUSTEE) Plaintiff Defendant First Third Party STOKARE PTY. LTD. (AS TRUSTEE) Second Third Party YELNAM PTY. LTD. (AS TRUSTEE) Third Third Party JUDGMENT - McPHERSON S.P.cr. Delivered the Ninth day of November, 1990 This is an appeal against an order of Master White striking out a statement of claim delivered by the defendant against third parties. The history of the matter is as follows. The defendant, as trustee for the Expocourt Unit Trust, entered into a written contract dated 7 December 1988 to purchase certain land from the plaintiff for $574,000. Payments were made in part satisfaction of the purchase moneys leaving a balance of $382,586 which was due but not paid at settlement on 2 June 1989. The plaintiff has issued a writ in an action in which it now claims damages for -- 4 of 14 -- 2 breach of contract against the defendant for failing to complete the sale. The "defendant in turn instituted third party proceedings against-holders of units in the Expocourt Unit Trust. They are three of the beneficiaries under that trust. A statement of claim against third parties has been delivered against them. In it the defendant claims to be indemnified by those third parties against the plaintiff's claim; and it also claims damages against them. The basis of the claim against those third parties is alleged to be that the third parties, the defendant, and Northcorp Limited entered into a joint venture agreement dated 7 December 1988 for development of the land that was the subject of the contract dated 7 December 1988 between plaintiff and defendant. The statement of claim against third parties alleges that, among other provisions, each "participant" in the joint venture agreed to make capital contributions in order to meet project expenses, and that the third parties failed to provide their share of such costs by 2 June 1988; as a result the settlement of the contract dated 7 December 1988 did not take place. The third parties are in para. 6 of this statement of claim alleged to hold their units in the trust by virtue of a trust deed dated 7 December 1988. By letter dated 2 October 1990 solicitors for the first and second third parties advised solicitors for the defendant that those parties proposed to apply to strike out the statement of claim against them as not disclosing a reasonable cause of action, or alternatively in reliance on the inherent jurisdiction of the Court. The letter specifies the particular points raised in support of the application as: (a) that the defendant's claim -- 5 of 14 -- 3 to indemnity was incapable of arising from the provisions of the joint venture agreement relied upon in the statement of claim because the term "participant" was defined in that agreement to exclude the defendant; and (b) that the trust deed pleaded in para. 6 expressly barred the defendant from claiming indemnity against the third parties. The joint venture agreement dated 7 December 1988 is in the form of a written agreement executed by the defendant, Northcorp Limited, and the three third parties. It recites that the defendant has purchased the land to hold it on trust for the participants and that they have agreed to acquire, develop and sell it. In support of its claim against the third parties the defendant relies principally on cl.3.2. The text of cl.3 is as follows:- "3.1 Subject to clause 3.2 the Participants shall not be liable to make any capital contribution. 3.2 The Participants shall make capital contributions in proportion to their Unitholding sufficient to meet any outstanding Project Costs. Unless the Trustee has or is able to make other arrangements for funding the outstanding Project Costs." The term "project costs" is defined in cl.1.1 of the agreement to include "all costs and expenses incurred by the participants ... or by the Manager on behalf of the participants", including specifically the cost of acquisition by the participants of the land. The land means the land the subject of the contract of purchase by the defendant dated 7 December 1988. The manager means Northcorp Limited. It has made its own claim in these proceedings, in which it is joined as a fourth party. The provisions of the joint venture agreement might on a broad view of the agreement be expected in some way to render -- 6 of 14 -- 4 the third parties as participants liable for the cost of purchasing the land. However, the expression "participants" is defined in cl.1.1 to mean Northcorp and the three named third parties as well as any other persons who may hold units in the Expocourt Unit Trust. defendant trustee itself. It therefore does not include the On behalf of the third parties for whom he appears, Mr Couper of counsel submits that cl.3.2 cannot in law sustain the defendant's claim for indemnity in respect of the purchase price of the land or for damages for failing to contribute to it. In addition, he invokes the provisions of cl.7, and in particular of cl.7.4, of the joint venture agreement. By cl.7 the defendant as trustee confirms that it holds the land on trust for the participants according to their unit holding as determined by the Expocourt Unit Trust. follows:- Clause 7 . 4 is as "7.4 The Participants jointly and severally authorise and direct the Trustee as and when registered as the proprietor of the Land to execute make and do all such transfers mortgages applications instruments deeds adts and things as may be directed by th~ Participants' Committee within its powers or otherwise by the Participants for the purpose of carrying out the objects of the Joint Venture and each Participant covenants with the Trustee to ratify and confirm all such matters and things done or performed by the Trustee in accordance with such directions and further covenants and agrees with the Trustee to indemnify and keep indemnified the Trustee against all actionsclaims costs and demands whatsoever in respect of any such matter or thing done or performed under and in conformity with the terms of this Agreement save only that the liability of each Participant to the Trustee shall be limited to the same proportion of the aggregate liability of the Trustee in respect of such actions claims costs and demands as the proportion of its Unitholding for the time being." It might be expected that the defendant as trustee would be entitled under these provisions to indemnity in respect of the purchase price of the land. However, cl.7.4 is quite specific. -- 7 of 14 -- 5 It in terms confines the participants' liability to indemnifying the defendant trustee against "all actions claims costs and demands whatsoever in respect of any such matter or thing done or performed under and in conformity with the terms of this Agreement ... ". The "such" in this part of cl.7.4 relates back to executing "all such transfers ... deeds acts and things as 0 may be directed by the participant's committee ... " referred to earlier in that sub-clause. What is more important, cl.7.4 is introduced by the limitation that those acts or matters may be authorised or directed to be done by the defendant trustee "as and when registered as the proprietor of the land". The whole basis of the plaintiff's claim in the action is that the defendant trustee never became registered as proprietor of the land, but that, in breach of the contract dated 7 December 1988, it failed to complete the purchase. Clause 7.4 is thus not capable of sustaining the defendant's claim to indemnity, but, on the contrary, tends to operate expressly or by implication to exclude it. It casts upon the participants a liability enforceable by the defendant but does so only when the defendant is registered as proprietor of the land, which is an event that has not and is not alleged to have taken place. I do not consider that cl.3.2 serves to make the participants liable to the defendant trustee in respect of the purchase price of the land. It obliges them to make capital contributions to the cost of the land, but only if the trustee has not made other arrangements for funding the outstanding project costs, which include the land acquisition costs. Clause 4. 1 expressly authorises the defendant to borrow from unit holders or third parties sufficient funds to enable it to -- 8 of 14 -- 6 complete the project; but it is not alleged that this course was adopted. Indeed, it was no doubt because it was not adopted that the contract of purchase of the land was not completed. There are other provisions in the agreement - notably those in cll.2.8 and 11.1 - that enable participants to enforce the duty to make contributions by one against another; but the defendant trustee is not a participant as defined and so cannot resort to those provisions in order to maintain its claim against the participants as third parties to the action. In any event, the defendant does not rely in its pleadings on any of these other provisions but principally upon cl.3.2 and to a lesser extept on cl. 4. 1 . In my opinion neither of these provisions on their proper interpretation justifies a conclusion that the defendant as trustee is entitled to indemnity or damages from the third parties as "participants" on, account of their failure to contribute to the purchase moneys needed to complete the contract and acquire the land. Clause 2.7 contemplates that the obligations of participants will be enforceable inter se rather than by the trustee. One might possibly be tempted to try to torture the provisions of the joint venture agreement into yielding up a means by which the defendant as trustee could enforce an obligation to make such contributions were it not for the provisions of the deed of trust. It is dated 7 December 1988, which is the same date as that of both the contract for purchase of the land and the joint venture agreement. It is made between the defendant as trustee and the persons listed in the schedule as unit holders ("the registered holders"), who are the participants under the joint venture agreement and the beneficiaries of the trust. The trust it constitutes is called -- 9 of 14 -- 7 the Expocourt Unit Trust, and it provides in cl. 2 for the establishment of a fund comprising sums of $1.00 per unit paid by each unit holder in respect of the units specified in the schedule. There is a total of 6 of these, so that little can be hoped for from that quarter. The critical provision is that contained in cl.28:- "28. Limitation of Liability ( 1 ) No registered holder shall by reason of his relationship with the trustee or by any reason whatsoever be under any obligation to indemnify the trustee against any liability or obligation incurred by the trustee in the course of exercising its duties rights powers and authorities in relation to the trust or the fund or arising therefrom or in the course of carrying on any business hereby authorised or in the event of there being any deficiency of the assets of the fund as compared with the liabilities of the trustee in relation thereto. (2) The trustee releases and forever discharges the registered holders and each of them from all or any right or claim to an indemnity in respect of any liability from time to time incurred by the trustee acting as trustee hereunder and the trustee covenants not to institute bring or commence any action at law or in equity or any civil proceeding in any court of competent jurisdiction in respect to any right or claim for indemnity from the registered holders or any of them in respect of such liability." Apart from this provision, the defendant would as trustee be entitled to be indemnified in respect of liabilities properly incurred in the course of acting as trustee. The liability incurred in entering into the contract to purchase the land would no doubt be an instance. The right to indemnity is available to a trustee both (1) against the trust assets; and (2) against the beneficiaries personally, provided at least that they are presently entitled and sui juris. The right to indemnity against the trust assets is in Queensland not capable of being excluded see Trusts Act 1973-1981, s.65; Kemtron -- 10 of 14 -- Industries Pty. Ltd. v. 1 Qd . R . 5 7 6 , at 5 8 5 . 8 Commissioner of Stamp Duties [ 1984] The right to indemnity against beneficiaries persorially occupies a different position, and Mr Lyons Q.C. concedes that it may be excluded by apt provision in the trust instrument. There is no doubt that cl. 28 ( 1), read with or without cl.28(2), has the effect of excluding the defendant's right to claim indemnity from the unit holders as beneficiaries personally. Mr Lyons contends that it goes no further than to exclude that right as such, and that it ought not and cannot be construed as limiting or affecting a claim by the defendant against third parties for damages for breach of contract to provide the means of completing the land purchase. That submission has a superficial attraction, but because of the extremely accepted. wide terms of cl . 2 8 it cannot in my opinion be Clause 28(1) expressly provides that no registered unit holder shall be under any obligation to indemnify the trustee against any liability incurred in exercising powers, etc. in relation to the trust, whether that obligation exists by reason of the unit holder's relationship with the trustee "or by any reason whatsoever". That leaves no room for a contention that cl.28(1) is directed only to indemnity arising from the trust relationship. It specifically extends well beyond it. In any event the present claim arises only by virtue of the trust relationship. It was for the very reason that the defendant was trustee that it entered into the contract to purchase the land, and the obligations and liabilities that it thereby undertook were incurred in the course of that trust and not otherwise. In law it cannot profit from its trust, and the relief that it now claims in the third party statement of claim -- 11 of 14 -- 9 is- therefore necessarily confined to securing indemnity against the consequences of breach of those obligations. That is plainly so in the case of the indemnity claimed in para. (a) of the prayer for relief in the third party statement of claim; but it is equally true of the liability for lost management fees claimed in para. (b), and also of the lost profits claimed in para. (c) of the prayer for relief. Whatever amount is thus claimed by the defendant in the action can, as against the "participants" in the joint venture agreement, who are the beneficiaries under the deed of trust, be recovered from them by the defendant only in the character of an indemnity to save it harmless from its own liability to another. The sole exception is afforded by cl.5 of the trust deed, which expressly allows the trustee to charge and be paid remuneration out of the fund or income; but no such remuneration is claimed, and there is evidently no fund or income out of which it could be paid. One may suspect that this rather surprising result may have been the outcome of an excess of zeal for avoiding the incidence of stamp duty by excluding the right to indemnity; but, whatever the reason, it is to my mind clear that in the face of cl.28 the defendant's claims in its statement of claim against the third parties whom Mr Couper represents are doomed to failure. In whatever form they are framed, they can afford no more or less than an indemnity for the reason that, permissible remuneration apart, a trustee l.ike the defendant is entitled to nothing else. The point (which is not raised by the notice of appeal) was made on behalf of the defendant that cl.7.4 of the trust deed was not in terms pleaded in the defences of the third parties. It was however specifically relied upon in the letter dated 2 October 1990 from solicitors for third parties that preceded -- 12 of 14 -- 10 the application to strike out. Moreover, the deed of trust is pleaded in para. 6 of the defendant's statement of claim against third parties, and there is authority that, on an application like this, that is sufficient to make it part of the pleading: Day v. William Hill (Park Lane) Ltd. [1949] 1 K.B. 632, at 649; followed in Carrick v. Armstrong [1969] Qd.R~ 185, at 190. That is no doubt not a satisfactory method of pleading a matter like cl.28 of the trust deed; but raising it in this way is a course that is sanctioned in the case of a demurrer O. 29, r. 6. Presumably it rests on some such principle as that a party who relies on the provisions of a document to found his cause of action is bound by all of its provisions. Mr Lyon's complaint is that, without a specific pleading of cl.28, he is unable to plead in reply an estoppel or waiver or some such other matter. However, we now know from Walton Stores (Interstate) Limited v. Maher (1988) 164 C.L.R. 387 that estoppels are in some circumstances capable of giving rise to causes of action, so that any allegations of the kind (which were not suggested in the course of argument to be more than abstract possibilities) could have been made in the defendant's pleading. Leave to amend or to deliver a reply was not sought either before me or before the Master. In any case, as Mr Couper pointed out, the present question could have been made the subject of determination as a point of law under 0.22, rr.27 and 28. In that event, the defendant would have run the risk of having its action against the third parties dismissed outright pursuant to 0.22, r.28. As it is, simply striking out the statement of claim against third parties will not have that more severe consequence. -- 13 of 14 -- 1 1 In my view the appeal should be dismissed with costs. The notice of appeal was filed but not served within the time allowed, and application was made to me to extend the time for serving it. It · does not Mr Couper raised no objection to that being done. appear from the affidavit of the appellant defendant's solicitors precisely when, if at all, it was that the notice of appeal was formally served on the respondent third parties' solicitors, although they had by 26 October 1990 become aware of the appeal. I think that the simplest way of dealing with this aspect is to dispense with service of the notice of appeal, and to dismiss with costs the appeal against the order of the Master made on 9 October 1990. -- 14 of 14 --