FEDERAL COURT OF AUSTRALIA EQUITY – appeal from interlocutory orders striking out amended statement of claim and staying proceedings – Letter of Credit issued for repayment of financial investments in production of a film – whether money paid for issue of Letter of Credit was to be held in trust – whether there was evidence from which a resulting constructive trust or trust based on the principles in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 could be established – whether statement of claim pleading causes of action based in whole or in part on a contention that payment was impressed with a trust were untenable and should be struck out CONTRACTS – joint venture - whether joint venturers liable for the debts, obligations and defaults of the "joint venture vehicle" company – whether an agency relationship existed between joint venture vehicle and joint venturers. Federal Court Act 1977 (Cth): s 24(1A) Federal Court Rules: O11 r 16, O20 r2 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Salomon v A Salomon & Company Limited [1897] AC 22 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 FAI Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343 Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 Re Armstrong, deceased [1960] VR 202 Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Fancourt v Mercantitle Credits Ltd (1983) 154 CLR 87 Webster v Lampard (1993) 177 CLR 598 BALMEDIE PTY LTD & ANOR v NICOLA RUSSO & ORS VG 716 of 1996 RYAN, WHITLAM & GOLDBERG JJ MELBOURNE 19 AUGUST 1998 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 716 of 1996 BETWEEN: BALMEDIE PTY LTD First Applicant KAMISHA CORPORATION LIMITED Second Applicant AND: NICOLA RUSSO First Respondent EQUUSCORP PTY LTD Second Respondent BENEFICIAL FINANCE CORPORATION LIMITED Third Respondent TARGRIDGE PTY LTD Fourth Respondent JOLANE PTY LTD Fifth Respondent JUDGE: RYAN, WHITLAM & GOLDBERG JJ DATE OF ORDER: 19 AUGUST 1998 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicants have leave to file their application for leave to appeal out of time and have leave to appeal. 2. The appeal be dismissed. 3. The applicants pay the respondents' costs of the application for leave to appeal and the respondents' costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 716 of 1996 BETWEEN: BALMEDIE PTY LTD First Applicant KAMISHA CORPORATION LIMITED Second Applicant AND: NICOLA RUSSO First Respondent EQUUSCORP PTY LTD Second Respondent BENEFICIAL FINANCE CORPORATION LIMITED Third Respondent TARGRIDGE PTY LTD Fourth Respondent JOLANE PTY LTD Fifth Respondent JUDGE: RYAN, WHITLAM & GOLDBERG JJ DATE: 19 AUGUST 1998 PLACE: MELBOURNE REASONS FOR JUDGMENT THE COURT: Introduction The applicants seek leave to appeal from the order of Heerey J on 12 May 1997 whereby he struck out the amended statement of claim filed 26 February 1997, ordered that the proceeding be stayed insofar as it raised causes of action based in whole or in part on contentions that the payment of $5,025,000.00 to Jolane Pty Ltd ("Jolane"), the fifth respondent and/or Equuscorp Pty Ltd ("Equuscorp") the second respondent, by the first applicant Balmedie Pty Ltd ("Balmedie") on 29 June 1990 was impressed with any trust or that any respondents were so liable on the basis of having entered into a joint venture with Equuscorp. The order made by his Honour refers to a cause of action based on contentions that the payment of $5,025,000.00 "to Jolane and/or Balmedie on 29 June 1990 was impressed with any trust" but we take that to be a reference to a payment of $5,025,000.00 to Jolane and/or Equuscorp as the payment was in fact made by Balmedie. Subject to the foregoing orders, his Honour granted the applicants leave to file and serve a further amended statement of claim within twenty‑one days. The form of orders was such that they are properly to be classified as interlocutory orders in respect of which leave to appeal is required pursuant to s 24(1A) of the Federal Court Act 1977 (Cth). Leave is sought on the basis that: (a) the decision of the primary judge is attended by sufficient doubt to warrant it being reconsidered by the Full Court; (b) substantial injustice would result if leave was refused; (c) the decision has a serious effect on the applicants' position. The application for leave to appeal was filed out of time and leave is also sought to extend the time within which to file the leave application. That leave is not opposed. The application before the primary judge was made pursuant to O 11 r16 and O 20 r2 of the Federal Court Rules but primarily under the latter rule. The primary judge took the view that the two causes of action referred to were so clearly untenable that they could not properly succeed and he applied the principles set out in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 in striking them out. That left remaining a number of causes of action including one based on misleading and deceptive conduct but his Honour considered that, because the claims based on the existence of a trust and a joint venture were inextricably bound up with the rest of the pleading, the amended statement of claim should be struck out and leave should be granted to file and serve a further amended statement of claim. Background The circumstances giving rise to the proceeding arise out of the financing and production of a film initially produced under the name "Night of the Leopard" but later released as "Double Impact". In order for the film to be produced it was necessary for the owner and producer, Balmedie, to obtain outside financing for the film. The second applicant, Kamisha Corporation Limited ("Kamisha") was the promoter of the film as well as the promoter of other films. The second respondent, Equuscorp was the financier approached to provide finance for the film. The third and fourth respondents are substantial shareholders in Equuscorp and the fifth respondent was associated with Equuscorp. The first respondent, Mr Russo, was the managing director of Equuscorp and of the fourth respondent, Targridge Pty Ltd ("Targridge") and a director of Jolane. Perpetual Trustees WA Limited ("Perpetual") which is not a party to the proceeding in this Court was the trustee under a trust deed for the investors in the film. On 9 May 1988 Perpetual and Kamisha executed a document described as "The Second Multiple Prospectus Deed" which provided for prospectuses to be issued for the production of films, for Kamisha to be the manager and for Perpetual to be the trustee for investors who might invest in such films. On 11 June 1990 a prospectus was lodged with the National Companies and Securities Commission in respect of the production of the film "Night of the Leopard" in which subscriptions were sought for up to 4,812 units of $100.00 each in a trust fund and up to 4,812 parcels of production contribution moneys of $5,000.00 each. Investors (called "production contractors" in the prospectus) had to apply for the same number of units and parcels of production contribution moneys so that each unit required the contribution of $5,100.00. Investors in the film agreed with Balmedie that it should produce the film. For this purpose Perpetual, as trustee for the investors, entered into a Production Services Agreement with Balmedie on 29 June 1990. The investors also appointed Kamisha to be manager on their behalf and act as their agent in respect of the production of the film pursuant to the Production Services Agreement. The Production Services Agreement provided that investors should receive a return on their investment in the form of: (a) a "base production services fee" which was 125% of their investment; and (b) further production services fees dependent upon the success of the distribution of the film. The base production services fees were payable to investors in instalments on the fourth, fifth and sixth anniversary of the Production Services Agreement. Under the Production Services Agreement Balmedie was required, as security for the payment of the fees payable to investors to provide: "… such securities (whether by way of letter of credit, bank guarantee or otherwise) as are acceptable to and approved by the Trustee." In the events which occurred, applications for 1903 units were received, 1675 of which were from investors who borrowed funds from Equuscorp for the purpose of their investment. Each of those investors executed a loan contract with Equuscorp and gave Equuscorp an assignment and charge over payments receivable from Perpetual as they fell due under the Production Services Agreement. By letter dated 28 June 1990 Equuscorp offered Balmedie a credit facility by way of a Letter of Credit for $10,468,750.00 which represented 125% of the total principal sums that Equuscorp had agreed to advance to investors to enable them to subscribe for units offered by the prospectus. The letter provided that the facility was to be used to issue a Letter of Credit to Perpetual as trustee for the second multiple prospectus trust. The offer required Balmedie to pay to Equuscorp $5,025,000.00 on 29 June 1990. That payment was to be regulated by a tripartite agreement whereby Balmedie was to pay the sum of $5,025,000.00 by bank cheque to Jolane by way of "an interest free deposit" repayable by Jolane to Balmedie as to $183,915.00 on 29 June 1994, $217,080.00 on 29 June 1995 and as to $4,624,005.00 on 29 June 1996. The tripartite agreement required Jolane to endorse a bank cheque in favour of Equuscorp for $5,025,000.00 and lodge it as an interest free deposit with Equuscorp. The tripartite agreement further provided that, whenever the Trustee should demand payment by Equuscorp under the Letter of Credit, Equuscorp would be entitled to draw down on the amount deposited with it by Jolane. The letter of 28 June 1990 also provided that: "The monies outstanding under the Facility shall be repaid on the following dates: 29 June 1994 : $ 183,915 29 June 1995 : $ 217,080 29 June 1996 : $4,624,005 but in any event on the termination date. Equus shall be authorised to withdraw from the Deposit Account the above amounts on the abovementioned dates. It is acknowledged and agreed by both Equus and Balmedie that when all the proceeds of the Deposit Account are released to Equus in accordance with the provisions of the Tripartite Agreement [it] shall be in full and final satisfaction of all liabilities of Balmedie to Equus under the Facility". The Letter of Credit was provided to Balmedie on 29 June 1990 and was in the following terms: "We have pleasure in detailing hereunder the particulars of the Standby Irrevocable Letter of Credit issued in your favour dated 29 June 1990. EQUUS FINANCIAL SERVICES LIMITED IRREVOCABLE STANDBY LETTER OF CREDIT DATED 29 JUNE 1990 ON ACCOUNT OF: BENEFICIARY: Perpetual Trustees W A Limited As Trustee for the Second Multiple Prospectus Trust 89 St Georges Terrace PERTH 6000 AMOUNT: Maximum Limit of Liability to be AUD $ 10,468,750 which may only be drawn strictly in accordance with the following Schedule: Date of Drawing Amount Available 29th June 1994 $382,740 29th June 1995 $452,250 29th 1996 [sic] $9,633,760 EXPIRY DATE: 29 June 1996 AVAILABLE AT: Equus Financial Services Limited 1st Floor 2 Clarke Street SOUTH MELBOURNE 3205 BY BANK Equus Financial Services Limited CHEQUE 1st Floor DRAWN BY: 2 Clarke Street SOUTH MELBOURNE 3205 PAYABLE AT: Sight. ENFACED: Drawn under Equus Financial Services Limited Irrevocable Standby Letter of Credit dated 29 June 1990. Drafts drawn under this Letter of Credit must be presented to: Equus Financial Services Limited 1st Floor 2 Clarke Street SOUTH MELBOURNE 3205 on or before the time and date of expiry specified above and be accompanied by a Statutory Declaration purporting to be made by two officers of the Beneficiary on behalf of the Beneficiary stating that: a) The Declarants have authority to make the Statutory Declaration on behalf of the Beneficiary. b) The Statutory Declaration is made pursuant to the terms of Equus Financial Services Limited Irrevocable Standby Letter of Credit dated 29 June 1990. c) The amount claimed is not more than the maximum aggregate amount available at the date of the said Statutory Declaration under Equus Financial Services Limited Irrevocable Standby Letter of Credit dated 29 June 1990. The amount of this Letter of Credit will automatically reduce by the amount of all drawing made in accordance with this Letter of Credit. Except where they may conflict with the abovementioned terms and conditions, the Uniform Customs and Practice for Documentary Credit (1983 Revision) International Chambers of Commerce Publication No 400 shall apply to this Irrevocable Standby Letter of Credit. Equus Financial Services Limited engages with Perpetual Trustees W A Limited as Trustee for the Second Multiple Prospectus Trust of 89 St Georges Terrace, Perth, Western Australia and/or bona fide holders that drafts drawn under and in compliance with the terms of this Letter of Credit shall be duly honoured on presentation. Yours faithfully, NICK RUSSO MANAGING DIRECTOR" In order to obtain this Letter of Credit on 29 June 1990, Balmedie paid to its associate, Jolane, $5,025,000.00 and Jolane paid that sum on the same day to Equuscorp in the manner provided by the tripartite agreement. Equuscorp gave a bank cheque to the third respondent, Beneficial Finance Corporation Limited ("BFC"), for the same amount. BFC gave a bank cheque to Perpetual for $8,375,000.00 and Equuscorp delivered the Letter of Credit to Perpetual. The first draw down under the Letter of Credit took place on 29 June 1994 when Equuscorp paid the amount due to Perpetual and received in return an amount in satisfaction of the charge held by Equuscorp over the proceeds due to the investors. A similar transaction occurred on the second draw down date 29 June 1995 and the final payment of $9,633,760.00 was due on 29 June 1996. Equuscorp was unable to pay that amount in full and, as a result, Perpetual claimed from Equuscorp by way of statutory demand $5,008,760.00. Equuscorp issued proceedings to set aside the statutory demand and on 12 May 1997 Heerey J varied the statutory demand to $943,765.00 after allowing for an offsetting claim in respect of the charge in favour of Equuscorp to secure repayment of amounts lent by it to investors. An appeal and cross‑appeal against the decision of Heerey J were dismissed by a Full Court on 5 December 1997 (unreported, French, Kiefel and Sundberg JJ). The amended statement of claim With that background we turn to the amended statement of claim. Paragraphs 1 ‑ 7 identify the parties to the proceedings. Paragraph 8 alleges: "At all relevant times, Equus is and was the joint venture vehicle for the joint venture between BFC, Mr Russo, Targridge and others ('the joint venture')." Particulars of the alleged joint venture are then provided in the following terms: "Equus was incorporated by BFC, Mr Russo, Targridge and others pursuant to the joint venture. Under the joint venture, BFC was to hold approximately 40% of the shares in Equus and Targridge, Mr Russo and others were to hold the remaining shares. BFC was to provide finance for the joint venture. In 1989 BFC funded 100 cents in every dollar lent by Equus to investors in international films. Targridge and Mr Russo marketed the financial services of Equus to small corporations and private borrowers. Further particulars will be provided after discovery." Paragraphs 9 ‑ 21 set out the terms of the relevant documents and agreements relied upon including the "Facility Agreement" entered into on 29 June 1990 between Balmedie, Equuscorp and Jolane whereby Equuscorp agreed to provide a Letter of Credit in favour of Perpetual in respect of Balmedie's obligations to pay the Base Product Services Fee under the Production Services Agreement to Perpetual for the production contractors. There then are pleaded several causes of action. Paragraphs 22 ‑ 26 allege a breach by Equuscorp of the Facility Agreement and Letter of Credit in failing to pay the sum of $5,008,000.00 in respect of the payment of $9,633,760.00 due on 29 June 1996 and allege that all the respondents other than Jolane are liable to pay that amount to Perpetual, Equuscorp having entered into the Facility Agreement and Letter of Credit as a joint venture vehicle for the joint venture between BFC, Mr Russo and Targridge. Paragraphs 27‑ 34 allege misleading and deceptive conduct based on representations made by Equuscorp, BFC and Targridge. Paragraphs 35 ‑ 37 allege a breach of duty of care in relation to the representations by Mr Russo, Equuscorp, BFC and Targridge. Paragraphs 38 ‑ 46 then allege that the applicants suffered loss and damage in respect for which the respondents other than Jolane are said to be liable. Paragraphs 47 – 58C allege that by reason of the Facility Agreement, constituted by the letter of 28 June 1990 from Equuscorp to Balmedie, a document entitled "Standard Terms and Conditions re letters of credit" and the tripartite agreement, Equuscorp and Jolane held the sum of $5,008,000.00 and income earned on it ("the trust fund") on trust for the investors and Perpetual and, if Equuscorp failed to use the trust fund for the exclusive purpose of enabling it to meet its obligations under the Letter of Credit to Perpetual, on a resulting trust for Balmedie. It was then alleged that Equuscorp and Jolane or one or other of them had failed to hold the trust fund in accordance with those trusts and that accordingly had committed a breach of trust in which Mr Russo and BFC had participated and for which they were liable to Balmedie as constructive trustees. Paragraphs 59 ‑ 65 raise issues of breach of the Corporations Law by Mr Russo, BFC and Targridge and paragraphs 66 ‑ 69 allege that Mr Russo, BFC and Targridge induced a breach of the Facility Agreement and the Letter of Credit by Equuscorp. The reasoning of the primary judge Before the primary judge the applicants relied primarily on the decision of the House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 in support of the proposition that the payment of the trust fund had been made on terms as to its disposition in such a way as to create a trust in respect of the payment. The primary judge held that the facts before him were quite different from those considered by the House of Lords. He regarded the objective circumstances as pointing to the conclusion "that Equus would have complete control of the money provided by Balmedie" noting that there was no suggestion at the time the money was paid of any restriction as to the manner in which Equuscorp could invest it. The critical term of the Facility Agreement relied upon by the applicants as pleaded was that: "the security deposit and the income earned thereon ("the trust fund") was to be applied and used by Equus exclusively for the purpose of enabling Equus to meet its obligations under the standby letter of credit to Perpetual;" That term was said to be partly in writing found in the tripartite agreement and partly to be "implied by the need to give the facility agreement business efficacy and by law". The primary judge discerned nothing in the Facility Agreement that gave rise to the suggested term. Nor did he consider it to be required to give business efficacy to the transaction. Rather, his Honour found that business efficacy: "… required a freedom for Equus to have as much flexibility as possible so that it could mix the Balmedie money with funds from other sources and manage its total funds so as to meet all of its liabilities and make a profit." The primary judge found that the effect of the relevant documents as a whole tended against the existence of a Quistclosetrust and ruled as inadmissible evidence of statements allegedly made by Mr Russo after the execution of the relevant agreements to the effect that the money paid by Balmedie to Equuscorp constituted trust funds. Relying on General Steel Industries Inc v Commissioner for Railways (NSW) (supra) at 131 the primary judge concluded that: "… any cause of action based in whole or in part on a contention that the payment by Balmedie to Jolane and/or Equus of $5,025,000 was impressed with a trust would be 'so clearly untenable that it cannot possibly succeed': General Steel, 112 CLR 125 (at 131)". The applicants' criticism of the reasoning of the primary judge is that he failed to take sufficient account of the surrounding circumstances, in particular a conversation in June 1990 whereby Mr Russo told Mr Reiner of Balmedie that: "… the sum of $5,025,000 would be 'held in trust and invested in a way to ensure that the proceeds of the Letter of Credit would be paid to the Trustee upon maturity' …". This evidence was not referred to by the primary judge in his reasons for judgment. The applicants also contend that evidence of the subsequent statements should have been admitted by his Honour as an admission against interest relevant to the issues of the real intention of the parties and the existence of a trust. Their final criticism, is that rather than deciding that there was no basis upon which the claim could possibly succeed, his Honour weighed up the various inferences from the evidence and reached a view of the likely outcome of the proceeding. In relation to the alleged joint venture, the primary judge relied substantially on Salomon v A Salomon & Company Limited [1897] AC 22 for the proposition that, subject to later statutory qualifications not presently relevant, one could not pierce the corporate veil and that shareholders and directors are not personally liable for the debts of a company. The primary judge regarded statements by Mr Russo that Equuscorp was embarking on a joint venture with others as not identifying a relationship making the presumptive joint venturers liable for the obligations of the joint venture vehicle Equuscorp. The applicants contend that the primary judge failed to take into account the fact that the evidence went beyond the involvement of BFC, Targridge and Mr Russo as mere shareholders or directors of Equuscorp and failed to take into account the fact that Equuscorp might be their agent and that s 84(2)(a) of the Trade Practices Act 1974 (Cth) could impose liability on directors and shareholders by reason of the joint venture and other evidence. Existence of a Trust The difficulty confronting the applicants in relation to the allegation of breach of trust is that the documentation relied upon does not provide any evidence, or support the proposition, that the money paid by Balmedie to Equuscorp, albeit through Jolane, was either to be held in trust or dealt with in such a way that a Quistclose trust would by implication if it were not dealt with in that way. In the statement of claim it is not said that this trust was created or constituted as an express trust; rather it is said that a trust was created, in effect, as a Quistclose trust because of the terms upon which the money was paid to Equuscorp. As pleaded (paragraph 20(e), (f) and (g)) a Quistclose trust was relied upon in the following terms: "… (e) the security deposit and the income earned thereon ("the trust fund") was to be applied and used by Equus exclusively for the purpose of enabling Equus to meet its obligations under the standby letter of credit to Perpetual; (f) further to (e), Equus would draw down from the trust fund such sums as would be sufficient to meet its obligations under the standby letter of credit to Perpetual; (g) if Equus did not hold or use the trust fund in accordance with the conditions set out in sub‑paragraphs (e) and (f), Equus and/or Jolane would hold the trust fund on a resulting trust for the Owner; …" However the evidence does not support these allegations. The particulars given of these terms were that the terms in sub‑paragraphs (e) and (f) were partly in writing and contained in the tripartite agreement and partly "implied by the need to give the business facility agreement business efficacy and by law". The particulars of the term in sub‑paragraph (g) were that it was "implied by the facility agreement business efficacy and by law". One looks in vain in the tripartite agreement for such terms as are alleged in sub‑paragraphs 20(e) and (f). Insofar as the terms are to be implied it was said that the implication arose from the need to give the Facility Agreement business efficacy and by operation of law. That implication was rejected by the primary judge and, in our opinion, correctly so. There is no principle of law which requires any such implication and there is nothing in the principles identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, as they can be applied to the documents in the present case, which provides a basis for asserting that business efficacy or law required the implication of such terms. The terms sought to be relied upon are not necessary to give business efficacy to the Facility Agreement as that agreement is effective without any of the alleged implied terms. Nor is the need for any of the suggestive terms so obvious that "it goes without saying". Further each alleged implied term contradicts the express terms of the agreement. Mr Robson QC, who appeared with Mr Peters for the applicants, submitted that the evidence of Mr Reiner that Mr Russo had referred in June 1990 to the fact that the money was held in trust established facts making it arguable that the deposit amount had been paid to Equuscorp to be held in trust. However, the suggestion that there was an express trust is inconsistent with the submission that a Quistclose trust was created. When the matter was argued before the primary judge it was not put on the basis of an express trust, but rather that there were circumstances from which a constructive trust could be implied. In our opinion the matter should be approached by asking whether there is evidence from which a Quistclose trust can be established and not whether there was an express trust. It was not put to the primary judge that there was an express trust and it is not pleaded. All that is said to have happened before the payment of the money which is said to raise the implication is that according to Mr Reiner, Mr Russo said that the fund was to be held in trust. However, that bald statement of itself, which is quite inconsistent with the relevant documentation, is not sufficient in our view to raise a tenable case that there is evidence of a Quistclose trust. The applicant submits that the primary judge erred in determining the trust issue by reference to the documents alone and did not have regard to conversations which supported the existence of the trust. Mr Robson submitted that as the intention of a person to create a trust was relevant to the issue whether a trust had in fact been created or constituted, evidence of conversations identifying that intention were admissible and had been disregarded or ignored by the primary judge. However, there is confusion as to how the applicants rely on the oral evidence in support of the existence of a trust. The trust relied upon in the statement of claim is a Quistclose or constructive trust, not an express trust. The only conversation relied upon by the applicants which occurred before to the payment of the money to Equuscorp is that identified by Mr Reiner in these terms: "… in June 1990, Mr Russo told me that the sum of $5,025,000 would be held in trust and invested in a way to ensure that the proceeds of the Letter of Credit would be paid to the Trustee upon maturity." Mr Russo was not present when the whole transaction was settled on 29 June 1990 and we therefore infer that this conversation occurred before that date. Mr Robson did not suggest that the conversation occurred on 29 June 1990 but submitted rather that it occurred in June 1990. In those circumstances the conversation does not assist the applicants in establishing a Quistclose or constructive trust but rather purports to evidence a proposal or intention to create an express trust upon which the applicants do not rely. However, the evidence does not support or warrant the conclusion that such an express trust was created and the existence of such an express trust is inconsistent with the relevant documentation. The applicants also rely in support of the suggested constructive trust on a number of conversations in which Mr Russo took part after 29 June 1990 but those conversations are of no probative value. The respondents invite the Court to reject the conversations but for present purposes we have assumed that they occurred as set out in the affidavits. Assuming evidence of it is admissible, which is disputed, the conversation on 13 October 1992 embodied only Mr Russo's view of the legal situation. It was an expression of opinion, contradicting the existence of an express trust and not purporting to express an intention to the create of a trust. Mr Russo is alleged to have said: "By now I can tell you the $0.60 [being the sum of $5,025,000] which we received from the studio [ie. the Owner] as the security deposit to purchase our Letter of Credit has grown to $0.79 in our ledger. These funds which we received from the studio were not placed on Trust with Equus but it would probably be regarded by everyone as a constructive trust because Beneficial [ie. the Third Respondent] who received these funds from Equus were a majority shareholder in Equus and had two directors on the board of Equus." Likewise, in the conversation of 30 October 1992 Mr Russo expressed only his view of the legal position and not an intention to create a trust. He allegedly said: "Beneficial will support Equus in relation to its obligation under the Letter of Credit. Beneficial are tied in by management involvement as well as by shareholding. They are bound by a constructive trust over the $0.60 deposit they received. That $0.60 has now grown to $0.81. We may agree to pass this benefit on to a new lender. I will need to talk to Ted Johnson who is group managing director of the State Bank of South Australia." That was not an admission. On 23 April 1996 a meeting took place at which there was a discussion about Equuscorp's inability to meet the Letter of Credit. The applicants say that in the course of the meeting Mr Russo said: "[t]he State Bank of South Australia has agreed to put up the funds required to meet the partial Letter of Credit payment because I have convinced them they are just giving back trust funds which they originally received from the American owner." This statement could not constitute an admission of the existence of a trust but like Mr Russo's earlier statements was no more than an expression of opinion, if he held it, of the disparity in which Equuscorp had received the funds. The primary judge rejected these conversations as inadmissible relying on the principles set out in FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343 and Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 and in our opinion he was correct in so doing. The documents which evidence the transaction such as the prospectus for the investors and the tripartite agreement do not refer to any limitation on the control which Equuscorp was to have over the funds provided by Balmedie and Jolane; nor does the documentation suggest that there was any restriction on the manner in which Equuscorp could invest or use the funds. There is no reference to any trust being constituted or created in relation to the funds deposited with Equuscorp, nor is there anything in that documentation from which one might infer that such a trust was to be constituted or created or that any trust might arise as a result of the manner in which Equuscorp might apply or use those funds. We are satisfied that the primary judge was entitled to conclude, as he did, that any cause of action based in whole or in part on a contention that the payment by Balmedie to Jolane or Equuscorp of $5,025,000.00 was impressed with a trust was "so clearly untenable that it cannot possibly succeed", relying on General Steel Industries Inc v Commissioner for Railways (NSW) (supra) at 131. His Honour did not err in principle in reaching that conclusion and did not apply an incorrect test or incorrect principle. His Honour was also correct in concluding that: "… the obligations of Equus were contractual only, were confined to the payment of fixed amounts on fixed dates, and were inconsistent with the creation of a trust in relation to the Balmedie money." For the reasons to which we have referred, the allegations based on the existence of a Quistclose or resulting trust are untenable. To that extent the primary judge made no error. The applicants submit that, although not pleaded, they should be allowed to invoke a cause of action involving the assertion that the payment of $5,025,000.00 on 29 June 1990 was impressed with an express trust. No such cause of action was relied upon before the primary judge, and should not, in the absence of special circumstances, be allowed to be raised on this application. Moreover, the evidence does not establish an express trust. The Court, it is true, is entitled to look at the acts and declarations of the parties at the time of the relevant transaction to determine the intention of the parties and whether, in particular, there was an intention to create an express trust: Re Armstrong, deceased [1960] VR 202, 205; Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491, 502 – 503. However, the evidence here falls far short of making out an express trust. More particularly is this so when one considers the documentation which the parties executed and the structure of the transaction. In our opinion there was "no real question to be tried" as to whether the payment of the $5,025,000.00 by Balmedie on 29 June 1990 was impressed with a trust and the primary judge was entitled to stay that cause of action: Fancourt v Mercantitle Credits Ltd (1983) 154 CLR 87, 99; Webster v Lampard (1993) 177 CLR 598, 602‑603. It was submitted that the primary judge applied the wrong test in determining whether the relevant causes of action should be struck out because he determined the contested factual issues on the balance of probabilities. It is said that his Honour weighed various inferences said to be available from the evidence and reached a view on the likely outcome of the proceeding. However, that is not a correct characterisation of the task his Honour undertook as he properly directed himself as to relevant principles and reached the conclusion that the obligations of Equuscorp were contractual only. Joint venture claim The applicant alleges that at all relevant times Equuscorp was: "… the joint venture vehicle for a joint venture between BFC, Mr Russo, Targridge and others". The particulars of the alleged joint venture were: "Equus was incorporated by BFC, Mr Russo, Targridge and others pursuant to the joint venture. Under the joint venture, BFC was to hold approximately 40% of the shares in Equus and Targridge, Mr Russo and others were to hold the remaining shares. BFC was to provide finance for the joint venture. In 1989 BFC funded 100 cents in every dollar lent by Equus to investors in international films. Targridge and Mr Russo marketed the financial services of Equus to small corporations and private borrowers. Further particulars will be provided after discovery." It is said that there was evidence which the primary judge disregarded which supported these allegations. Mr Russo denied there was any such joint venture as alleged but the applicants relied upon evidence to which we shall refer. However, it is important to understand what is said to be the joint venture because a company can be identified as being involved in, or being part of, a joint venture in two respects. It can be said that a company is part of a joint venture in the sense that it is one of a number of participants in that is to say it is one of several joint venturers. It may, alternatively, be said that a company is a joint venture in the sense that it is the vehicle or means by which a joint venture between a number of joint venturers is implemented. In those circumstances, the company is not one of the joint venturers, nor is it part of the alleged joint venture. What is said in this case is that Equuscorp is "the joint venture vehicle" for the joint venture between the joint venturers. The particulars in the statement of claim make this clear. It is not said that Equuscorp was one of the joint venturers. According to the applicants the evidence discloses that BFC, Targridge, Mr Russo and Equuscorp were engaged in a joint venture. However, that misstates the evidence which does not suggest a joint venture between BFC, Targridge, Mr Russo and Equuscorp. Mr Reiner deposed in his affidavit: "There is ample evidence that Beneficial, Targridge and Mr Russo were engaged in a joint venture through Equus." We have assumed for the purposes of the argument and the appeal that this statement is correct (although it is denied by the respondents). Where Equuscorp has contracted with third parties, the existence of joint venturers lying behind the corporate structure of Equuscorp does not make those joint venturers, because of the existence of the joint venture, liable for the debts, obligations and defaults of the joint venture vehicle. The primary judge's reliance on Salomon v A Salomon & Company Limited (supra) was not misplaced. Further, such evidence does not justify the conclusion that Equuscorp was acting as agent for the joint venturers. There is no evidence that Equuscorp was acting as agent for the joint venturers. The applicants point secondly to the fact that BFC held a 40% shareholding in Equuscorp. However, that does not entail that BFC is liable for Equuscorp's debts, obligations and defaults or that Equuscorp was acting as its agent. That shareholding pre‑dated the transaction entered into on 29 June 1990, having been acquired initially on 23 December 1987. Similarly the applicants rely on the fact that Targridge held the majority of the balance of the shares in Equuscorp. That does not make Targridge liable for Equuscorp's debts, obligations and defaults, nor does it constitute Equuscorp as the agent of Targridge. Targridge's shareholding, initially acquired on 23 December 1987, pre‑dated the transaction entered into on 29 June 1990. Likewise, the representation of BFC and Targridge on the board of Equuscorp does not support the proposition that Equuscorp in its corporate capacity was acting as the agent of either BFC or Targridge. It was next asserted that in the preceding financial year BFC had financed 100 cents in the dollar of each of Equuscorp's transactions. That also misstates the evidence which was rather that BFC had financed 100 cents in every dollar that Equuscorp lent to borrowers for investment in international films. The related circumstances that BFC's consent and support was necessary to enable Equuscorp to enter into the Letter of Credit transaction, that Mr Russo sought and obtained BFC's authority to enter into the transaction and that BFC financed the transaction, attended its settlement and benefited from it as a financier or shareholder in Equuscorp do not, separately or in combination, establish that Equuscorp was acting as agent for the so‑called joint venturers in entering into the Facility Agreement and the Letter of Credit. In short, there was no evidence before the primary judge of the existence of any joint venture for which Equuscorp had acted as agent nor was there any evidence tending to establish that kind of agency. In our opinion, there was no evidence before the primary judge which suggested or warranted the conclusion that the involvement of BFC, Targridge or Mr Russo went beyond that of being shareholders or directors of Equuscorp. The primary judge expressed as follows the principle by which one assessed whether the cause of action involving the joint venture could be made out: "Assuming the existence of a joint venture, in the sense of a relationship giving rise to fiduciary obligations between the joint venturers, the rights of outsiders as against the joint venturers are to be determined by the law applicable to the particular vehicle adopted by the joint venturers, be it company, partnership or trust, and the particular contractual relationship with the outsider." Applying that principle, his Honour concluded that although Mr Russo may have referred on a number of occasions to Equuscorp embarking on a "joint venture" with others: "…there is no basis for a case that, vis‑ŕ‑vis outsiders such as the applicants, the liabilities of Mr Russo and Targridge for any obligation of Equus can be based on any footing other than that of director and shareholder. Causes of action based in whole or in part on the allegations of joint venture are in my view untenable, within the meaning of Dey and General Steel." His Honour disclosed no error of principle in reaching this conclusion. The applicants also rely upon s 84(2)(a) of the Trade Practices Act 1974 (Cth) but that reliance is misconceived as that provision is only relevant if it is established that conduct has been engaged in on behalf of a corporation. To say that the primary judge failed to have regard to s 84(2)(a) begs the question in this case where there is no evidence that Equuscorp in entering into the transaction and executing the Facility Agreement and Letter of Credit was acting as agent for any of the claimed joint venturers or was acting otherwise from as a principal in its own right. It is trite law that a company is a separate entity, and distinct legal person, from its shareholders and does not become an agent for its shareholders simply because of the fact that they are shareholders. Although the order sought to be appealed from is interlocutory in nature we would grant leave to appeal as the order was not so much concerned with a matter of practice and procedure as with the entitlement of the applicants to pursue and continue substantive causes of action: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. However, we are satisfied that the learned primary judge did not err in the manner in which he approached his task under O 20 r2. In our opinion his Honour was entitled to find that the causes of action predicated on the existence of a resulting or Quistclose trust and on the existence of a joint venture were untenable that they should be struck out and that the proceeding should be stayed in relation to those causes of action. The appeal will be dismissed with costs. I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justices Ryan, Whitlam and Goldberg Associate: Dated: 19 August 1998 Mr R Robson QC and Mr J Peters Counsel for the applicants: Solicitor for the applicants: Madgwicks Counsel for the first, second, fourth and fifth respondents: Mr FGA Beaumont QC and Ms PM Tate Solicitors for the first, second, fourth and fifth respondents: Mark Leaker Counsel for the third respondent: Mr RJ Whitington QC and Mr DG Gaszner Solicitors for the third respondent: Corrs Chambers Westgarth Dates of Hearing: 30 September and 1 October 1997 Date of Judgment: 19 August 1998