Fatman Corporation Pty Ltd v Trigamist Holdings Pty Ltd [2001] NSWSC 504

New South Wales Supreme Court

CITATION : Fatman Corporation Pty Ltd v Trigamist Holdings Pty Ltd [2001] NSWSC 504 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4136/98 HEARING DATE(S) : 01/06/01 JUDGMENT DATE : 1 June 2001

Fatman Corporation Pty Ltd (P) Trigamist Holdings Pty Ltd (D1) PARTIES : John Nicollo Cosco (D2) Kay Violet Cosco (D3) Stephen R Webster (D4) JUDGMENT OF : Young CJ in Eq

LOWER COURT Supreme Court (Master) JURISDICTION : LOWER COURT 4136/98 FILE NUMBER(S) : LOWER COURT Master McLaughlin JUDICIAL OFFICER :

COUNSEL : J S Wheelhouse (P) P Brereton SC and M Meek (D1-3) SOLICITORS : Koffels (P) Potts Latimer (D1-3) CATCHWORDS : PRACTICE [115]- Masters- Parties must not treat hearing before Master as unimportant preliminary hearing- Master not referred to implications from documents tendered- Resulting order- Appeal allowed but appellant to bear costs. DECISION : Appeal allowed.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in Eq

FRIDAY 1 JUNE 2001

4136/98 - FATMAN CORPORATION PTY LTD v TRIGAMIST HOLDINGS PTY LTD

JUDGMENT 1 HIS HONOUR: This is an appeal from two judgments of Master McLaughlin. 2 The first appeal is from a decision of the learned Master that he should not grant an adjournment of a motion to strike out the statement of claim. The motion had been set down before the Master for hearing; the adjournment was basically on the ground that counsel had deserted the plaintiff at short notice; the plaintiff was represented by a solicitor who had been involved in the matter since the institution of the proceedings. The Master also considered that the costs which would be thrown away if the matter did not proceed would be in the vicinity of about $10,000 and that there must be some question as to the ability of the plaintiff or those behind the plaintiff to meet an order for costs. 3 Accordingly, he refused the application for adjournment. That was a discretionary judgment. It was a matter for the Master. He considered the appropriate matters, he made his decision, I cannot see any reason to reverse it. 4 The matter then proceeded before the learned Master and he struck out the statement of claim. The core point before the Master was whether the plaintiff had standing to proceed with this case because it alleged in its statement of claim that it was the trustee of a certain unit trust and was suing as such trustee. 5 The learned Master said: "The evidence before the court clearly discloses...that the plaintiff had on 22 August 1996 been removed as trustee of that unit trust and had been replaced as such trustee by Mr C.J.Palmer...". 6 The learned Master said additionally that the plaintiff had not sought to challenge the removal of the plaintiff as trustee of the unit trust, or the appointment of Mr Palmer, nor in the present suit had it asked for relief in relation to that matter. He then proceeded to say: "It seems to me that, if the plaintiff is to rely on any invalidity in regard to the foregoing events, then it is for the plaintiff to raise at least a prima facie case of such invalidity. It has not chosen to do so. It has not chosen in any way, by process in the Court, to challenge the validity or to seek any relief. It does not seem to me appropriate that the present defendants should be placed in the position where they are required to approach the Court seeking relief relating to matters the existence or non-existence of which is an essential ingredient to the cause of action which the plaintiff is asserting in the present proceedings." 7 The learned Master accordingly struck the proceedings out as an abuse of process. 8 There was also in the motion before the Master a back up application for security of costs, and the learned Master said in the light of his conclusion it was not necessary to make any such order. But he said: "Were it necessary for me to do so I would be disposed to make an order that the plaintiff provide security for the costs of the applicant/defendant in the amount referred to in paragraph 3 of the notice of motion". 9 The amount stated in the notice of motion was $158,865 and was supported by the evidence of the defendants' solicitor, Mr Reed. As to quantum, the learned Master said that despite some criticisms made on behalf of the plaintiff concerning Mr Reed's affidavit that material would at least in general terms be accepted as establishing at least an estimate of the likely costs. 10 The plaintiff appeals. 11 Mr Wheelhouse of counsel for the appellant put that the learned Master by not agreeing to the adjournment application had deprived himself of the assistance of barristers who would have clearly pointed out to the learned Master that there were a large number of arguments that could be put as to why the plaintiff's assertion in its statement of claim, that it was still the trustee of the unit trust, was correct. In a strike out application, all that was needed to be shown to the court for the motion to be dismissed was that the matter was at least probably arguable but, when one looked at the terms of the relevant trust deed and the Corporations Law, one could see that that threshold had been well and truly passed. Counsel put that what seemed to have happened was that the learned Master did not fully consider the trust deed probably because his attention was not sufficiently directed to it. 12 It would seem from what I have been told that the defendants' counsel had not seen the trust deed until it was tendered rather late in the proceedings. It would seem also that the learned Master, because he took the view that I have set out, that there was no actual challenge to the validity of the alleged appointment of Mr Palmer as a new trustee in place of the plaintiff, that it was not necessary to look at those matters. 13 With great respect it seems to me that to take that attitude is to take one's eye off the real question that the Master had to consider. He had to consider whether it was an abuse of process for a plaintiff to make this claim that it was the trustee on the material that was before the Master. When one looks at that material there are at least seven reasons why the purported removal of the plaintiff as trustee could be invalid, viz: