MJJK Investments Pty Ltd acting as trustee for the Martha Kennedy Family Trust v Kennedy; Kennedy v MJJK Investments Pty Ltd acting as trustee for the Martha Kennedy Family Trust

The background in this matter is set out in my judgment of 14 June 2024 in Aberdeen Bear Pty Ltd v MJJK Investments Pty Ltd. [1] To repeat:

James has taken the steps referred to in clauses 2(a) and (b) of the Heads of Agreement.

James accepts that he did not pay Martha the $3 million referred to in clause 2(c) of the Heads of Agreement, but contends that the Heads of Agreement do not impose that obligation on him.

Martha commenced these proceedings on 19 September 2024. By her Summons, Martha seeks to recover from James the $3 million referred to in clause 2(c) as if it were a debt.

James has filed a List Response and Cross-Claim seeking, amongst other things, declarations that the clawback provisions in the Heads of Agreement, to which I referred at paragraph 75 of my earlier judgment, are void as a penalty.

Martha, through her legal team, now accepts that the claim to recover $3 million as a debt against James is not maintainable.

Thus, in their submission, Mr Robertson SC and Mr Walsh, who appeared for Martha, said:

Martha now seeks to contend, and I understand that this is uncontroversial, that the effect of the Heads of Agreement is that the parties agreed that the payment referred to in paragraph 2(c) would be made by way of capitalising a fixed unit trust in accordance with what the parties referred to at paragraph 7 of the Heads of Agreement as the "Minters tax/restructuring advice".

There is evidence that James had taken some steps in this regard, including circulating, last Friday 25 October 2024, a proposed trust deed.

Martha wishes to contend that, nonetheless, James is in breach of his obligations because, to adopt the words in Mr Robertson's and Mr Walsh's submissions, James did "nothing in aid of the payment contemplated by that clause before 30 June 2024", and still does not, it is alleged, unconditionally agree to do so.

That is, the allegation is that James did not do, and has not said that he is prepared to do, what was required of him by the combined effect of the Heads of Agreement and the Minter's advice.

James contests each of those matters.

Martha now seeks to amend her claim in these proceedings to seek an order that James specifically perform his obligations under the Heads of Agreement, and under clause 2(c) in particular. Martha has, through her legal team, circulated a proposed Amended Summons and Amended Commercial List Statement.

I heard detailed argument this morning as to whether Martha has an arguable claim to seek an order for specific performance. It is not necessary for me to descend into the detail of that argument, save to say that I consider that she has at least an arguable case, assuming that the various factual contentions and questions of construction for which she contends are established.

Mr Bova SC, who appears with Mr Rogers for James, said, and I accept, that James is not in a position to meet this claim and will wish to adduce evidence of, amongst other things, evidence on the question of James' willingness to perform his obligations under 2(c), and, perhaps, to support a claim that the Heads of Agreement be rectified in an identified manner.

It was clear in those circumstances that the matter could not proceed today.

The question comes down to whether I should permit Martha to amend her claim as she proposes, in effect vacate today's hearing date, and allow the matter to proceed on the basis of Martha's proposed amendments; or dismiss the proceedings on the basis that Martha does not seek to prosecute the proceedings in their current form, and that James cannot meet today the proposed amended claim.

The difficulty with the former proposition is that the proposed Amended List Statement does not plead the case that Mr Robertson SC and Mr Walsh have foreshadowed that Martha wishes to make.

The central plank in the proposed Amended Commercial List Statement remains C23, which alleges that:

This allegation is unchanged from the current Commercial List Statement.

That is not what Martha's case now is. Mr Robertson suggested that the matter could be dealt with by the provision of particulars concerning clause C23. I do not consider that would be a satisfactory way to deal with the matter.

The fact is that the case Martha now seeks to advance is quite different to that she has pleaded and different to that that she proposes to plead.

In those circumstances, I was tempted simply to dismiss the Summons. On reflection, however, I have concluded that that course is only likely to have the effect of adding even more costs to those the parties are incurring in what is, in substance, a dispute between a mother and her son. It would also mean that there will be a delay in the determination of the question that James wishes to raise in his Cross-Claim in these proceedings, that is whether the clawback provisions are void as a penalty. That is a question the answer to which, surely, each party wants to know.

In those circumstances, I make the following orders: