E S GORDON PTY LTD and ANOR v IDAMENEO (No 123) PTY LTD [1997] NSWCA 98

E S GORDON PTY LTD and ANOR v IDAMENEO (No 123) PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GLEESON CJ, MASON P and MEAGHER JA 23 October 1997, 17 December 1997 [1997] NSWCA 98

TRUSTS — UNIT TRUST — notice of issue of additional units — construction of notice.

TRUSTS — UNIT TRUST — invalid issue of additional units to unit holders in a unit trust — acquiescence by unit holders — dispute as to meaning of terms of issue of additional units — question of construction of notices of issue — HELD — trial judge did not err in construing notices.

Gleeson CJ The issue in this appeal concerns the construction of certain notices issued by the trustee of a unit trust to unit holders. It is not in dispute in the appeal that the action of the trustee to which the notices related was beyond power. However, it is also not now in dispute that the appellants, who were two of the unit holders, subsequently acquiesced in the conduct of the trustee and, for that reason, the notices, as between the trustee and the appellants, had legal affect according to their terms. The argument is about the meaning of those terms.

The point which is the subject of the appeal was only one of a number of matters in dispute in proceedings commenced in the Equity Division. Some of those matters were settled between the parties. Others were resolved by Young J in a series of judgments. The point presently in question was resolved by Young J adversely to the appellants.

Because of the limited nature of the appeal it is possible to summarise the background to the litigation relatively briefly.

The respondent, Idameneo (No123) Pty Ltd, was the trustee of a unit trust established for the purpose of providing various services to a group of medical practitioners. The trust was known as the Artlu Unit Trust. The two appellants, E S Gordon Pty Ltd and Thomas Bateman Pty Ltd, are companies controlled by two of those medical practitioners. They subscribed for units in the trust. A number of other practitioners also subscribed for units, but they are not, at least at this stage, in dispute with the respondent. The respondent is a company controlled by Dr Edmund Bateman. Another company controlled by him was also a unit holder in the trust.