Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Sara Stockham Pty Ltd v WLD Practice Holdings Pty Ltd [2021] NSWCA 51 Hearing dates: 19 March 2021 Decision date: 06 April 2021 Before: Gleeson JA at [1]; Leeming JA at [2]; Emmett AJA at [39]. Decision: 1. The notice of appeal filed 9 December 2020 be dismissed as incompetent. 2. The application for leave to appeal be dismissed. 3. Sara Stockham and Sara Stockham Pty Ltd pay the costs of WLD Practice Holdings Pty Ltd in this Court. Catchwords: CONTRACT - unitholders agreement - one unitholder wished to exit - agreement contained provision for valuation of units of exiting unitholder - unitholders agreement also contained provision prohibiting trustee from effecting decisions in respect of Major Policy Issues without unanimous unitholder resolution - construction of those provisions determined as separate questions - whether valuer required to be satisfied that decisions made by trustee had complied with clause concerning Major Policy Issues APPEAL - leave - cross-claim dismissed following answers to separate questions - whether appeal as of right - requirement to show matter at issue to value of $100,000 Legislation Cited: Judicature Act 1873 (UK), s 25 Law Reform (Law and Equity) Act 1972 (NSW), s 5 Supreme Court Act 1970 (NSW), ss 101, 103 Trustee Act 1925 (NSW), s 63 Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 51.41 Cases Cited: Berry v Berry [1929] 2 KB 316 Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87; 373 ALR 591 Burns v Corbett; Gaynor v Burns (2017) 96 NSWLR 247; [2017] NSWCA 3 Cenric Group v TWT Property Group [2018] NSWSC 1570 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598; [1954] HCA 16 Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 Lorrimar v Serco Sodexo Defence Services Pty Ltd [2014] NSWCA 371 Melbourne Port Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2019] AC 119; [2018] UKSC 24 Rapsey, in the matter of Australasian Mortgage Finance Ltd (Administrator Appointed) [2021] FCA 189 Rema Tip Top Asia Pacific Pty Ltd v Grüterich [2019] NSWSC 1594 The Owners – Strata Plan No 91322 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2019] NSWCA 89 WLD Practice Holdings Pty Ltd v Sara Stockham [2020] NSWSC 1488 WLD Practice Holdings Pty Ltd, in respect of the WLD Practice Holdings Trust v Sara Stockham [2020] NSWSC 395 WLD Practice Holdings Pty Ltd, in respect of the WLD Practice Holdings Trust v Sara Stockham [2020] NSWSC 464 Category: Principal judgment Parties: Sara Stockham Pty Ltd (First applicant) Sara Stockham (Second applicant) WLD Practice Holdings Pty Ltd (Respondent) Representation: Counsel: R Newlinds SC, V R W Gray (Applicants) C N Bova SC, D J Reynolds (Respondent) Solicitors: Tony Gye Law (Applicants) Russell Kennedy Lawyers (Respondent) File Number(s): 2020/349255 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division – Expedition List Citation: [2020] NSWSC 1488 Date of Decision: 27 October 2020 Before: Sackar J File Number(s): 2020/72732 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. GLEESON JA: I agree with Leeming JA. 2. LEEMING JA: Two dentists, Dr Scott David Williams and Dr Sara Stockham, agreed to conduct their practices jointly. Entities controlled by them became equal unit holders of the "WLD Practice Holdings Trust", established by deed dated 29 September 2015, the trustee of which is the respondent. The same entities were also equal shareholders of the respondent, and the two dentists were the respondent's directors. They, their companies and the trustee entered into a Unitholders Agreement dated 28 October 2016 which, relevantly, addressed the circumstances when one unit holder wished to sell its units. Speaking generally, provision was made for the appointment of a valuer to determine "fair market value" in accordance with cl 13. 3. The Court was told that on 6 May 2019, the first applicant, Sara Stockham Pty Ltd, which is controlled by the second applicant, Dr Stockham, gave a notice triggering the valuation process. Many of the details of the litigation that has ensued are not apparent from the appeal books. It seems that the trustee sought judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) concerning the appointment of a valuer, while Dr Stockham and her company sought a stay of that application based on a dispute resolution clause. The stay application was dismissed: WLD Practice Holdings Pty Ltd, in respect of the WLD Practice Holdings Trust v Sara Stockham [2020] NSWSC 395. Shortly thereafter, advice to the effect that the trustee would be justified in engaging, among others, Mr Matthew Gwynne of PKF Australia was obtained: WLD Practice Holdings Pty Ltd, in respect of the WLD Practice Holdings Trust v Sara Stockham [2020] NSWSC 464. No appeal has been brought from either of those decisions. 4. Subsequently, Dr Stockham and her company sought orders for the production of trust documents to her, seemingly for the purpose of making submissions to Mr Gwynne. The original cross-summons was dated 28 April 2020. The course which the parties followed thereafter is not entirely clear from the documents. Helpfully, a copy of an amended notice of motion filed on 14 September 2020 was provided to the Court. The motion sought leave to file a proposed amended cross-summons seeking a larger range of documents, liberty to use those documents for the purposes of resolving the dispute or in subsequent proceedings concerning, inter alia, cl 7.8 of the Unitholders Agreement and, most relevantly for present purposes, prayer 3: "3. AN ORDER either: (a) that by reason of clause 7.8 of the unitholders' agreement the valuation of the shares and units in the WLD Practice Holdings Trust being undertaken by Matthew Gwynne is to be undertaken on the basis that any Major Policy Issue falling within Schedule 3 to that agreement effected by the Plaintiff trustee of the Trust is to be disregarded unless a unanimous resolution approving the transaction had first been passed, or alternatively (b) declaring the true meaning and effect of clause 7.8 of the unitholders' agreement for the purposes of that valuation." 1. The cross-summons also sought orders declaring that a valuation made by Mr Gwynne dated 25 August 2020 was not made in accordance with the requirements of cl 13 of the Unitholders Agreement and an order setting that valuation aside. It would appear that the litigation was no longer designed to provide documents to be used in a submission to Mr Gwynne, but extended to a challenge to the reasoning in his report, which by that time had been prepared. (In principle, it might have been open to seek an interlocutory injunction to prevent the report from being finalised, but that would require proferring the usual undertaking as to damages, and there is nothing in the materials to suggest that such an application was made.) 2. In those circumstances, rather than moving on the amended notice of motion, the parties agreed to orders for the separate determination of two questions pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW), namely: "(a) What is the true meaning and effect of clause 7.8 of the Unitholders' Agreement? (b) On the proper construction of cl 13 of the Unitholders Agreement, is the Trustee Company Accountant (the Valuer), in determining the Fair Market Value for a Unit under that clause, required to disregard any transaction relating to a Major Policy Issue unless the Valuer is satisfied that there is evidence before the Valuer of a Unanimous Resolution approving the transaction in accordance with cl 7.8, with the result that a failure to do so will invalidate the valuation?" 1. The form of the questions reserved for separate determination reflected the alternative orders sought in prayer 3 of the proposed amended cross-summons. Although there was no transcript, this Court was told, without objection, that it was accepted at the time those questions were reserved that unfavourable answers to those questions would lead to the dismissal of the cross-summons, because there was no longer utility in seeking production of the documents. 2. The parties exchanged written submissions and there was a short hearing on 8 October 2020. The primary judge delivered judgment on 27 October 2020: WLD Practice Holdings Pty Ltd v Sara Stockham [2020] NSWSC 1488, and answered those questions as follows: "(a) Clause 7.8 is a contractual embargo upon the Trustee giving effect to decisions in respect of Major Policy Issues in the absence of a Unanimous Resolution. The clause has no role to play in the Trustee Company Accountant (Valuer) determining the Fair Market Value of a Unit under clause 13. In other words the Valuer does not need to be satisfied or take into account whether there is evidence that clause 7.8 has been complied with, with respect to any Major Policy Issue. Nor is the Valuer's satisfaction as to such matters a condition to the validity of any determination under clause 13. (b) No." 1. On 12 November 2020, orders were made by consent not merely encapsulating those answers, but also dismissing the cross-summons with costs. 2. I have concluded that the primary judge answered both questions correctly. It follows that neither those answers, nor the subsequent dismissal of the cross-summons, should be altered on appeal. The appeal requires leave 1. The notice of appeal purports to be as of right. An appeal from answers to separate questions is available, but only with leave: Supreme Court Act 1970 (NSW), s 103. However, this appeal is brought not from the answers but rather from the dismissal of the cross-summons. Notwithstanding some dicta in this Court to the contrary, the order dismissing the cross-summons is a final order disposing of a proceeding in the Equity Division, and thus is capable of giving rise to an appeal as of right (see The Owners – Strata Plan No 91322 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2019] NSWCA 89 at [5]). 2. However, appeals as of right do not lie from all final orders made in the Equity Division. An appeal only lies by way of leave unless it is shown that the order dismissing the cross-summons is one that involves a matter at issue amounting to or of the value of $100,000 or more, or involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more, within the meaning of s 101(2)(r) of the Supreme Court Act. It is necessary for the appellant to show that he or she has a realistic prospect of increasing his or her wealth by $100,000 or more if the appeal were to succeed: see Lorrimar v Serco Sodexo Defence Services Pty Ltd [2014] NSWCA 371 at [71]-[72] and the decisions there cited. In a case such as this, that requires evidence. That is to say, even if the questions were answered favourably to Dr Stockham, and even assuming that Mr Gwynne's valuation were to be set aside, it would be necessary to consider whether any subsequent valuation would, as a result of the answers given to those questions, result in a sufficiently different valuation of the units so as to satisfy s 101(2)(r). This is the reason why, as was properly conceded when brought to counsel's attention, leave is required. The Trust Deed 1. The Unit Trust Deed was in fairly standard form. Each unit was expressed to entitle the holder (as recorded in a register) to a joint "beneficial interest in the Trust Fund as an entirety" but to no particular security or investment. The trustee was required to determine the income of the Trust Fund in each Accounting Period, and empowered to distribute it to unitholders. Clause 7.2 provided that the trustee was to keep "a complete and accurate record of all receipts and expenditures on account of the Trust Fund", and to prepare written accounting reports periodically. 2. Some of the parties' written and oral submissions equated the position of unitholders to those of members of a company. There are similarities, and indeed there is much in the Trust Deed which seeks to assimilate the position. However, in some fundamental respects, the position is quite different. Like the unit trust considered in Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 at 609; [1954] HCA 16, a unit of the WLD Practice Holdings Trust is fundamentally different from a share. A share confers no proprietary interest in company assets, while the unit confers a proprietary interest in all of the trust assets. The notion in the applicants' written submissions at first instance that a sufficient definition of a unit may be obtained by taking a definition of share, and replacing "trust" for "company" and "unit" for "share", is mistaken. References in oral submissions to the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 are inapt to describe the relationship between trustee and unitholder. The Unitholders Agreement 1. It is not necessary to summarise the Unitholders Agreement in any great detail. Although the heading to cl 23.3 is "Entire Deed", it was executed as an agreement and otherwise for the most part is drafted as an agreement. I mention this because it purported to prevail over the trust deed. That is not entirely free from controversy. The fact that an agreement for consideration was effective in equity to vary a deed, a position which prevailed following the enactment of the judicature legislation, was explained in Berry v Berry [1929] 2 KB 316. The rule at common law that a deed could only be varied by a deed was a "conflict or variance" to which s 25(11) of the Judicature Act 1873 (UK) and its counterparts (relevantly, s 5 of the Law Reform (Law and Equity) Act 1972 (NSW)) applied, with the position at equity prevailing. But cl 7.1 of the Trust Deed went further and provided that it could be varied only by supplemental deed or resolution, and not otherwise. No submissions were made as to the continuing correctness of the authorities collected in Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 at [35]; cf MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2019] AC 119; [2018] UKSC 24, a decision which has repeatedly been said not to reflect the position in Australia (see Cenric Group v TWT Property Group [2018] NSWSC 1570 at [103], Rema Tip Top Asia Pacific Pty Ltd v Grüterich [2019] NSWSC 1594 at [306] and Rapsey, in the matter of Australasian Mortgage Finance Ltd (Administrator Appointed) [2021] FCA 189 at [44]). In the absence of submissions, it is appropriate to follow the course taken in Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2019] NSWCA 87; 373 ALR 591 at [122] and not take this point any further. It is sufficient to proceed on the basis, favourably to the applicants and in accordance with Australian authority, that the Unitholders Agreement prevails. 2. Clause 7.8 of the Unitholders Agreement provided as follows: "7.8 Major Policy Issues (a) Notwithstanding any other provision in this Agreement, the Trustee Company must not effect any decision in respect of any Major Policy Issues unless first approved by Unanimous Resolution by the Unitholders. (b) Any decision in relation to a Major Policy Issue which is not approved by Unitholders by Unanimous Resolution is void and of no effect." 1. "Major Policy Issues" were defined to mean the matters set out in Sch 3, which relevantly provided as follows: "3. agreement by the Trustee to the sale, transfer, lease, assignment, disposal or acquisition of Trust assets or entry into any contract to do so where the market value of such assets or the consideration in respect of the sale or acquisition of such assets is in excess of $50,000; … 6. the Trustee entering into borrowings or other financial accommodation resulting in total financial accommodation to, or borrowings of, the Trustee exceeding $50,000." 1. Clause 13 provided for the determination of "Fair Market Value", and was as follows: "13.1 Meaning of Fair Market Value In this Agreement 'Fair Market Value' for a Unit (Relevant Unit) means the fair market value for that Relevant Unit on a going concern basis as at the date of offer or deemed offer to sell or subscribe for that Relevant Unit, on the premise that: (a) all of the Units are subject to sale between willing, but not anxious, vendors and a willing, but not anxious, purchaser dealing at arm's length; and (b) by reference to past accounts and current management figures and forecasts for the Trustee Company and Trust; (c) taking into account past and prospective earnings and underlying net asset values of the Trust; (d) from the value attributed to all of those Units, the value of that Relevant Unit will be pro-rated accordingly. 13.2 Determination of Fair Market Value (a) The Fair Market Value must be determined by the Trustee Company Accountant, adopting the method of valuation that the Trustee Company Accountant considers reasonably appropriate, with consideration of the following matters: (i) the matters set out in clause 13.1; (ii) without regard to whether a majority or minority interest is being sold (if applicable); (iii) applying generally accepted valuation principles. (b) Unless otherwise specified in this Agreement, the Trustee Company must use reasonable endeavours to procure that a determination of the Fair Market Value of Units by the Trustee Company Accountant occur within (1) month of: (i) in respect of clause 10.4, the giving of the Notice of Sale; or (ii) in respect of clause 11, the date the Event of Default occurs. (c) In making a determination, the Trustee Company Accountant acts as an expert and not as an arbitrator, and the Trustee Company Account's [sic] decision will be final and binding on the Unitholders except in the case of manifest error. (d) Each Unitholder: (i) must provide the Trustee Company Accountant with full access to relevant books and records and any information required by the Trustee Company Accountant to complete its determination of the Fair Market Value; and (ii) may make written submissions to the Trustee Company Accountant in respect of the matter being determined. (e) The costs of the Trustee Company Accountant will be borne by the Trust. (f) Upon the Trustee Company Accountant making, a determination, the Trustee Company must procure that the Company Accountant give the determination in writing to the Trustee Company, and the Trustee Company must serve the same on all Unitholders." A Unanimous Resolution was defined to mean "a resolution passed by one hundred per cent (100%) of the votes cast by the Unitholders entitled to vote on the resolution". Submissions on construction of the Unitholders Agreement 1. The submissions advanced by Mr Gray, who appeared at first instance for Dr Stockham and her company, articulated an elaborate argument based on the effect of cl 7.8. Given the breadth of "Major Policy Issue" transactions, it appears to have been contended that a series of transactions had been entered into by the trustee, contrary to cl 7.8. Her submission was that: "There is no uncertainty as to consequences if a Major Policy Issue transaction is entered into without complying with clause 7.8(a). Clause 7.8(b) provides for what is to happen in those circumstances: clause 7.8(b) provides that, as between the parties to the unitholders' agreement, the transaction is 'void and of no effect' so that no rights or obligations arise from the transaction as between any of those parties inter se – as between the parties the transaction never occurred. The result will be that, as between the parties inter se, the unitholder or Principal who entered into the transaction will be in the same position as an outsider who had no authority to act tor the Trust." 1. That in turn was submitted to inform the valuation process required by cl 13. Thus it was submitted to the primary judge that: "The 'past accounts' and 'past and prospective earnings and other like assets' must mean past accounts and past and prospective earnings and underlying assets calculated in accordance with the unitholders' agreement including clause 7.8". 1. That submission was faithfully summarised by the primary judge at [14]-[16]. It was rejected by his Honour, as is plain from the terms of his answer to the first question. The answer to the second question followed. 2. Order 3 of the proposed amended cross-summons is the source of the precisely drafted second question reserved for separate determination. It is necessary to attend to its precise form. His Honour determined merely that the valuer was not required to disregard transactions relating to a Major Policy Issue unless certain circumstances were satisfied. I did not understand the correctness of that answer to be in dispute. 3. Attention was directed to the answer to the first question. Prominent in the submissions on appeal was the proposition that if a trust asset were valued in the books at a certain price, it may be appropriate to undertake a separate valuation, especially if the asset had been recorded at cost price. Aspects of his Honour's reasons tended, so it was submitted, against that proposition. In the course of reaching a conclusion that cl 13 was not qualified by cl 7.8 in the way contended by the second question, the primary judge said at [38] and [40]-[41]: "My view is that clause 13, if invoked, is intended expressly to place the Valuer in a position where they have by design very little room to move. They are given a dedicated path and material to use on the way. They are in effect directed to make certain assumptions about the financial status of the Trustee" and: "It would be strange if the Unitholders were intending by clause 13 to be handing over to [a] third party valuer an obligation to interfere in the business of the trust by, for example, making rulings on values of transactions, especially those where the financial interests of one of the Unitholders could be negatively affected. There is nothing in the language of either clause 7.8 or clause 13 to suggest that outcome, nor could it be in my view reasonably implicit. While each Unitholder may make written submissions to the Valuer (cl 13.2(d)(ii), those submissions are to be made 'in respect of the matter being determined' which is the Fair Market Value for a Relevant Unit not the accuracy of the underlying accounting records. The Unitholders' Agreement cannot in my view be objectively construed to provide a mechanism by which decisions on Major Policy Issues are not finally determined by the unanimous decisions of the Unitholders but by a stranger after he or she has made corrections to the books and records of the Trust, whose decision, aside from in the case of manifest error, will be final and binding on the Unitholders (cl 13.2(c))." 1. It was said that those passages were inconsistent with the valuer performing the ordinary task of determining the assets of the trust, which might very well be different from the book value. But that falls well short of establishing appellable error, for two reasons. 2. First, the reasons were directed to explaining why his Honour answered the questions the way he did. They were not directed to the different question whether, say, an asset entered into the books at cost value should bear a different value not because of some non-compliance with cl 7.8, still less because it had not been demonstrated that there had been compliance with cl 7.8, but rather because the book value was not its true value. It is wrong to rely on reasons given for the purpose of answering a particular issue for a different purpose; reasons of courts must always be read in context: Burns v Corbett; Gaynor v Burns (2017) 96 NSWLR 247; [2017] NSWCA 3 at [89]-[90]. 3. The key to his Honour's reasoning as to the construction of cl 7.8 is in [37]: "Clause 7.8 does not refer to any transaction which follows an unconstitutional decision. That falls to be the subject either of an action for breach of agreement or breach of trust. The clause only renders void the decision not the transaction that follows it. One very obvious reason why this is so is that the agreement cannot affect the rights of third parties who treat with the Trustee for example at arm's length." 1. The primary judge thereby distinguished decisions of the trustee to which cl 7.8 applied, which were void, from transactions entered into after a decision had been made. The effect of cl 7.8 was not to make a transaction entered into pursuant to the decision void. His Honour said, with respect correctly, that cl 7.8 could not affect the rights of third parties who treat with the trustee at arm's length. That is the ordinary meaning of the words in cl 7.8, and it accords with commercial commonsense. 2. His Honour also said at [36] that the clause had nothing to do with any valuation process conducted by a third party valuer at the direction of the trustee pursuant to cl 13, which was elaborated in the passage at [38] and [40]-[41] reproduced above. 3. Given the tenor of the submissions which his Honour was required to resolve, and the questions his Honour was required to answer, his Honour's reasons should not be understood as holding that a valuer would invariably ignore cl 7.8. For example, a clause such as cl 7.8 is very valuable for a minority unitholder, and may diminish the value of the units owned by a 95% unitholder, because control of a meeting of members is not of itself enough to authorise the trustee to take actions in respect of Major Policy Issues. That is to say, cl 7.8 diminishes any value attributable for "control". Rather, his Honour's language is to be understood as a rejection of the submission that an entirely separate accounting treatment was required by cl 7.8 to be given in order to conduct a cl 13 valuation, namely, altering every transaction in excess of $50,000 which was not evidenced by written authorisation from both unitholders. 4. Secondly and in any event, appeals do not lie from reasons. Mr Newlinds (who appeared for Dr Stockham in this Court but not at first instance) touched on this point earlier in his address but concluded, with commendable candour, as follows: "My real complaint is that answer in the reasons is wrong. I have to accept that as drafted it's possible the answer to the question actually asked is no because it's too narrowly drafted. But the point I understand was up for debate was: can he look behind the accounts in the context of has a major policy determination been made without unanimous determination of unitholders, and his Honour's answer is no. ... I firstly tried to persuade your Honour that there's error in the reasons. I do accept that there's another step. I need to persuade your Honour that the relevant order which is the dismissal of the cross summons was bad but if, as I thought was the position, that was because the conclusion was that all these documents would be wholly irrelevant to the process, then that order is an error. If it's as … Mr Bova says was the position, I have no reason to doubt what he says, then it's still an error because if the parties were debating manifest error on some unfiled cross summons, which it seems they might have been, then it would have been erroneous on his Honour's conclusion. His Honour was satisfied that the valuer had not taken these submissions into account. If he'd come to the contrary conclusion, he should have concluded manifest error or beyond power and sent it back to the expert. Those are my submissions." 1. Mr Newlinds was correct to acknowledge the need to identify error in the answers to the questions, or the order dismissing the cross-summons. However, as Mr Bova submitted in response, whether the valuer could look behind the accounts to determine the true value of the trust assets was not before the Court at all. What was before the Court, by reason of the decision of the parties to identify for separate determination two questions of contractual construction, was those two questions of construction and nothing else. 2. The Court was told that not only had the valuation been made, but also the shares and units have been transferred. There may still be a dispute as to whether the valuation was one which bound the parties, and, more generally, whether one of the directors or shareholders or unitholders has an entitlement to complain about decisions made which affected the value of the business. Both sides mentioned the possibility of Anshun estoppel during submissions. These reasons are not intended to express any view, one way or the other, as to the existence of any remaining dispute, and whether or not what has hitherto occurred stands in the way of further litigation. 3. All that the judgment at first instance determined was the answer to the separate questions. Appeals do not lie from reasons, and even though there are aspects of the reasons of which Dr Stockham complains, the parties are only bound by the answer. On the one hand, it is regrettable that the underlying dispute concerning the true value of half of the units in the unit trust has not been determined and will not be determined in this appeal. On the other hand, choices such as those made by the parties are common and indeed inevitable in litigation, especially in the Expedition List, where the options may be the rapid determination of a pure question of law or the inevitability of a delay of some months to obtain a decision on a more complex issue involving disputed facts. 4. There seem to have been attempts on the part of Dr Stockham and her company to place factual material going beyond the questions of construction identified in the separate questions before the primary judge. During the course of the hearing, his Honour observed that "I want to make it abundantly plain you are consenting to me being able to deal with these separate questions as separate questions on the basis of pure construction", and his Honour did so. 5. In all those respects, the outcome in this Court turns on the forensic decisions made at first instance narrowing the issue and the way it was litigated. 6. Grounds 1-8 of the notice of appeal in substance rehearsed the submissions made at first instance. They were not separately addressed in the very brief written submissions (some 4½ pages) supplied in advance of the hearing, or in oral address. They give rise to some questions, which are not free from difficulty, if the contention concerning the operation of cl 7.8 is correct. Those questions include whether a breach of cl 7.8 is a breach of trust as well as a breach of contract, and how precisely the trust accounts should be altered if provision is to be made for the rights created by the breach. But Dr Stockham's construction of cl 7.8 is not correct, for the reasons already given, and it is unnecessary to summarise the grounds of appeal or the written submissions separately. To resolve this appeal, it is sufficient to observe that (a) the answers given by the primary judge are correct, and (b) there is no basis for challenging in this Court the consensual dismissal of the cross-summons by the parties, based on the answers to the separate questions. Orders 1. The purported appeal does not lie without leave. Following an examination of the questions determined separately on their merits, there is no basis for a grant of leave to challenge either the answers or the dismissal of the cross-summons. It follows that the notice of appeal is incompetent and should be dismissed. However, in circumstances where the parties had prepared for the hearing as if the appeal were as of right, and where the issue posed by s 101(2)(r) was raised by the Court, this is a case for departing from the special costs regime which would otherwise apply pursuant to UCPR r 51.41(2). 2. I propose that: 1. The notice of appeal filed 9 December 2020 be dismissed as incompetent. 2. The application for leave to appeal be dismissed. 3. Sara Stockham and Sara Stockham Pty Ltd pay the costs of WLD Practice Holdings Pty Ltd in this Court. 1. EMMETT AJA: The respondent, WLD Practice Holdings Pty Limited (the Trustee) is the trustee of the WLD Practice Holdings Trust (the Trust). The first applicant, Sara Stockham Pty Limited (the Stockham Unitholder), holds 50% of the units of the Trust. The second applicant, Dr Sara Stockham (Dr Stockham), controls the Stockham Unitholder. The holder of the other units in the Trust is Oorang Pty Limited (Oorang), whose directing mind and will is Dr Scott Williams. The Trustee, together with five subsidiary companies, carries on the business of a dental practice. 2. The operation of the Trust is regulated by a Trust Deed and a Unitholders Agreement. Clause 10.4 of the Unitholders Agreement deals with pre-emptive rights and relevantly provides that, if a unitholder wishes to sell its units (Sale Units), it must give a notice of sale to the Trustee. Upon receipt of a notice of sale, the Trustee must obtain a valuation of the "Fair Market Value" of the Sale Units in accordance with cl 13. Once the Trustee has received the valuation, the Trustee must send to every other unitholder a copy of the notice of sale. If the Trustee receives, from other unitholders, offers to purchase all of the Sale Units at the valuation, the Trustee must accept the offers and give notice to the vendor and the purchaser. The Unitholders Agreement provides a mechanism for the calculation of the fair market value by the accountant of the Trustee in accordance with cl 13. 3. The Stockham Unitholder gave a notice of sale but a dispute arose concerning the process for the determination of the fair market value of the Sale Units of the Stockham Unitholder. The Trustee commenced proceedings seeking judicial advice in respect of certain aspects of the dispute under s 63 of the Trustee Act 1925 (NSW). The Stockham Unitholder and Dr Stockham unsuccessfully sought a stay of that proceeding. The Stockham Unitholder and Dr Stockham then filed a cross-summons in the proceedings against the Trustee seeking access to certain documents. The cross-summons also sought orders declaring that a valuation of the Sale Units was not in accordance with the requirements of cl 13. The parties to the cross-summons agreed to the formulation of two preliminary questions, one determination of which would result in the dismissal of the cross-summons by consent. 4. For reasons published on 27 October 2020, a judge of the Equity Division answered the questions and made an order dismissing the cross-summons. The questions and the answers given by the primary judge are as follows: "(a) Question: What is the true meaning and effect of clause 7.8 of the Unitholders' Agreement? Answer: Clause 7.8 is a contractual embargo upon the Trustee giving effect to decisions in respect of Major Policy Issues in the absence of a Unanimous Resolution. The clause has no role to play in the Trustee Company Accountant (Valuer) determining the Fair Market Value of a Unit under clause 13. In other words the Valuer does not need to be satisfied or take into account whether there is evidence that clause 7.8 has been complied with, with respect to any Major Policy Issue. Nor is the Valuer's satisfaction as to such matters a condition to the validity of any determination under clause 13. (b) Question: On the proper construction of cl 13 of the Unitholders Agreement, is the Trustee Company Accountant (the Valuer), in determining the Fair Market Value for a Unit under that clause, required to disregard any transaction relating to a Major Policy Issue unless the Valuer is satisfied that there is evidence before the Valuer of a Unanimous Resolution approving the transaction in accordance with cl 7.8, with the result that failure to do so will invalidate the valuation? Answer: No." 1. By notice of appeal filed on 9 December 2020, the Stockham Unitholder and Dr Stockham appealed from the orders made by the primary judge. I do not consider that there was any error on the part of the primary judge in his answers to the two questions posed to him. 2. I have had the advantage of reading in draft form the reasons of Leeming JA. I agree with his Honour, for the reasons given by him, that the appeal must be dismissed as incompetent and I agree with the orders proposed by him. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 April 2021