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: (a) that at the relevant meeting all the unit holders had not been given notice convening the meeting because ASIC, or whatever it was called at that time, had vested in it under s 576 of the Corporations Law as it existed in 1996 many of the units in the unit trust; (b) that one cannot, unless there are special provisions, have a meeting of only one unit holder; (c) that there was no compliance with paragraphs 22 to 27 of the trust deed; (d) it was for the trustee to act under clause 24, not the unit holders; (e) that the trustee was required actually to amend the trust deed to empower the unit holders to act; (f) accordingly, the motion purportedly passed by the unit holders after they had resolved to amend the deed was premature; (g) that the trustee had never in fact amended the deed. 14 Any one of those points, or perhaps some others would be sufficient to make the matter one that was not so clear as it could be dealt with in a strike out application. 15 Accordingly, it seems to me that I should allow this appeal. However, the court cannot allow the situation to occur where people keep asking for adjournments on grounds that are personal to themselves, as the history of this case tends to show has been happening on the plaintiff's side and then, at the very last moment, appear by competent counsel and point out that what has occurred should not have occurred through the court not having sufficient assistance. I believe that it is appropriate in the circumstances of this case that I should allow the appeal but also order that there be some security for costs, and make an order for costs of the motion other than what would be the ordinary order for costs. 16 When a matter is before a Master it is before the Supreme Court. The Court expects that parties will put their best foot forward, they will present the Master with all the facts and they will present the Master with all the contentions of law. If they fail to do that it is unlikely that they will get any sympathy on appeal. However, on appeal, Judges also have to consider the legal rights of the parties and it may be that every so often - and this case is one - where reluctantly the appeal has to be allowed. 17 I think the appropriate order for costs is that the plaintiff pay the costs of the motion before the Master, but that the costs of the appeal should be costs in the cause. 18 I order that the plaintiff provide security for costs: (a) in the sum of $55,000 such security to be provided no later than 2 July 2001, otherwise the proceedings should be stayed until further order; 19 (b) upon the proceedings being listed for call over before the Registrar or otherwise before the Judge conducting case-management, any such further sums as are necessary from time to time to secure the defendants' costs for the on going conduct of the proceedings. 20 I do this because it is clear that there are questions as to the ability under the Corporations Law, of the plaintiff corporation to provide for the costs and it is appropriate that those behind the litigation ensure that the defendants are not prejudiced. 21 The security can take the same form as that previously ordered by Bryson J or such other form as a Registrar may order. The notice of motion filed in Court today and the proceedings generally are stood over to the Registrar's list to be mentioned on 14 June 2001. ************* Last Modified: 06/20/2001 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.