Cassaniti v Katavic (No 2)

1. [1]

   GLEESON JA: This appeal arises from a dispute between unitholders of a trust established for the purpose of undertaking a property development.

2. [2]

   As to the parties, the second appellant Ms Nancy Morvillo is the sister of the first appellant Mr Sam Cassaniti who was an undischarged bankrupt at all the relevant times up until 26 June 2017. The first respondent, Mr Dennis Katavic, is the sole director and shareholder of the second respondent, Antalija Developments No 4 Pty Ltd (Antalija No 4), the trustee of the Antalija Unit Trust, which was formed to undertake a proposed development. The third respondent, Ms Jocelyn Katavic, is the wife of Mr Katavic. She is also the daughter of Ms Susan Price. Each of Mr Katavic, Ms Price and Ms Morvillo subscribed for units in the Antalija Unit Trust as trustee for their respective family discretionary trusts.

3. [3]

   In February 2017, Antalija No 4 as trustee of the Antalija Unit Trust entered into a contract to purchase land at Moncrieff in the Australian Capital Territory for $4.15 million. Settlement of the contract occurred in May 2017. The development of the land comprising 40 lots was completed in November 2019. Disputes then arose concerning (a) the trustee’s dealings with trust property, (b) a claim by a financier to recover a purported loan to the trustee, and (c) the terms of a unitholders’ agreement with respect to proportionate capital contributions and interest on excess contributions to the trust fund.

4. [4]

   The underlying proceedings had a complex procedural history; the pleadings underwent several iterations, deletion of plaintiffs, amendments, and substitution of new claims. Three corporate plaintiffs together with Ms Morvillo brought claims against Antalija No 4, Mr Katavic and Ms Katavic, among others. Reliance Financial Services Pty Ltd (Reliance) sought to recover a purported loan of $1.159 million to Antalija No 4 relying on a development funding agreement allegedly executed by Mr Katavic on his own behalf and for Antalija No 4 on 11 May 2017, and an amended agreement allegedly executed in July 2018. This claim was abandoned during the trial after Mr Cassaniti had been cross-examined about the authenticity of the development funding agreement. The other claims by the corporate plaintiffs were either abandoned or not pressed at the trial.

5. [5]

   Ms Morvillo brought an equitable claim alleging several breaches of trust by Antalija No 4 and knowing assistance in those breaches by Mr Katavic and Ms Kativic, including the giving of security over the Moncrieff land in June 2017. The relief sought included the removal of the trustee, the winding up of the trust and orders for the taking of accounts.

6. [6]

   Shortly prior to the commencement of the hearing, Ms Morvillo obtained leave to amend to include a money claim against Antalija No 4 for interest on her excess contribution to the capital of the Antalija Unit Trust relying on the terms of a unitholders’ agreement signed by Mr Katavic and Ms Price on 10 May 2017. (Ms Morvillo did not sign until 24 February 2022.) Antalija No 4 and Mr Katavic obtained leave to file an amended cross-claim against Ms Morvillo and Mr Cassaniti alleging misleading or deceptive conduct by Mr Cassaniti as agent for Ms Morvillo concerning disclosure of the terms of the unitholders’ agreement. That conduct was said to contravene s 18 of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth). The primary relief sought was a declaration that the unitholders’ agreement was void ab initio.

7. [7]

   In his judgment delivered on 22 May 2022 (Reliance Financial Services Pty Ltd v Antalija Developments No 4 Pty Ltd [2022] NSWSC 519), the primary judge (1) rejected the breach of trust claim insofar as it concerned the giving of security over the Moncrieff land in June 2017; (2) upheld the misleading conduct claim against Mr Cassaniti and Ms Morvillo; and (3) deferred consideration of Ms Morvillo’s other claims alleging breach of trust and the relief sought with respect to the removal of the trustee, the winding up the trust and taking of accounts.

8. [8]

   On 15 June 2022, his Honour made declarations and orders giving effect to his decision on the amended cross-claim, including a declaration in par [5] that cl 9(e) and (f) of the unitholders’ agreement were void ab initio. His Honour also made case management directions for the future conduct of the outstanding issues in the proceedings. No formal order was made dismissing the breach of trust claim in relation to the giving of security over the Moncrieff land in June 2017.

9. [9]

   The appellants appeal, or alternatively seek leave to appeal, if necessary, from that part of the judgment of Robb J which upheld the misleading conduct claim and rejected the breach of trust claim. Leave to appeal is required insofar as the orders below are interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). The parties diverged as to whether leave is necessary.

10. [10]

    For the reasons given below, to the extent necessary there should be a grant of leave to appeal, except against Ms Katavic. As the appeal and application for leave to appeal against Ms Katavic were not pressed, each should be dismissed with costs.

11. [11]

    As against Antalija No 4 and Mr Katavic, the appeal should be allowed in part in relation to the misleading conduct claim and otherwise should be dismissed. The declaration in par [5] made on 15 June 2022 should be set aside and, in lieu, the amended cross-claim against Ms Morvillo and Mr Cassaniti should be dismissed. Given the mixed outcome on appeal the active parties should be given an opportunity to make submissions on the question of costs in this Court.

Background

1. [12]

   His Honour addressed in detail the parties’ discussions in November 2016 concerning the proposed development (at J[46]-[100]), the establishment of the Antalija Unit Trust (at J[101]-[118]), the purchase of the Moncrieff land in February 2017 and the communications between Mr Katavic and Mr Cassaniti in relation to funding that purchase (at J[135]-[151]), the circumstances of the execution of the unitholders’ agreement on 10 May 2017 and completion of the purchase of the Moncrieff land on 12 May 2017 (at J[161]-[163], [182]-[208]) and the communications between Mr Katavic and St George Bank leading to the grant of the mortgage over the Moncrieff land in June 2017 (at J[225]-[242]). His Honour made an adverse credit finding in relation to Mr Cassaniti (at J[345]-[354]) and was otherwise satisfied that each other witness, including Mr Katavic, Ms Katavic and Ms Price gave evidence in a satisfactory manner (J[342]).

2. [13]

   The following summary of the primary facts is drawn from the primary judge’s findings.

3. [14]

   Mr Katavic was a builder who conducted business through Antalija Constructions Pty Ltd (Antalija Constructions). Between mid-2014 and May 2016, he had undertaken three residential development projects in the Canberra region using separate companies for each development, with funding for those developments arranged through a bank. By November 2016, Mr Katavic through Antalija Constructions had a substantial amount of work ongoing, with two development projects under construction and one ready for commencement: at J[67]. However, he had no available money to carry out any further development projects at that time; the capital available for engaging in any new development was limited until the sale of the units in the developments he had carried out had been sold.

4. [15]

   As at November 2016, Ms Price and her husband Mr Phil Arcidiacono were under enormous financial pressure due to action taken against them by the Australian Taxation Office. They sought advice from Mr Cassaniti who was a consultant to an accounting firm, Accolade Services Pty Ltd (Accolade). Mr Cassaniti had developed a friendship with Ms Price and Mr Arcidiacono, which grew to include Ms Price’s daughter, Jocelyn Katavic, and her husband, Dennis Katavic. The primary judge characterised the relationship as being one of mutual trust: at J[82]. Mr Arcidiacono passed away in September 2018.

5. [16]

   In November 2016, Mr Katavic, Mr Cassaniti and Mr Arcidiacono had a discussion at a bar before a dinner at the QT Hotel in Canberra in relation to a possible development in which Mr Katavic, Ms Price and Mr Cassaniti would participate with a view to generating profit for each of them, and importantly, assisting Ms Price and her husband in dealing with their then financial difficulties. Mr Katavic’s motivation was more than profit; he wanted to financially assist Ms Price. There was a dispute at trial as to the terms of this conversation. The primary judge accepted Mr Katavic’s version of the conversation: at J[99], [395]. There is no challenge to that finding.

6. [17]

   The primary judge observed that the November 2016 conversation was brief and did not deal with the terms of the proposed venture in detail; it was an informal conversation in a family context where the discussion was convivial, and the participants consumed a number of alcoholic drinks: at J[355]. His Honour found that the discussion probably did not give rise to a binding agreement: at J[357]. He also found that the agreement matured into a binding one at a later stage by reason of steps taken by the parties to commit funds to the venture and by the signature of various documents: at J[357]. He found that the “informal” agreement reached between the parties to that discussion in November 2016 had the following material features (at J[358]):

7. [18]

   His Honour further found that significant features of this “somewhat inchoate agreement” were (at J[359]):

8. [19]

   His Honour found that the commercial position of Mr Katavic was quite different to that of Ms Price and Mr Cassaniti who, in practical terms, were passive investors who were to receive a return on their capital investments, noting the indulgence to Ms Price arising from the limited amount of capital that she was able to contribute: at J[364]. On the other hand, Mr Katavic was to be entirely responsible for the acquisition of the development site, the necessary design and the obtaining of planning approval, obtaining the necessary bank finance, and finally, the construction of the development through his company, Antalija Constructions: at J[365].

9. [20]

   Importantly, his Honour found that it was not the case that Mr Katavic was to be spared the need to contribute capital to the proposed development. Although the agreement concerning how Mr Katavic would procure bank finance for half the purchase price of the development site was indefinite, it was in fact left to him to do so: at J[367]. His Honour found that Mr Katavic, through Antalija Constructions, ultimately did contribute capital of $1.39 million to the Moncrieff land development: at J[368].

10. [21]

    Mr Cassaniti caused Antalija No 4 to be incorporated on 29 November 2016 with Mr Katavic as the sole director and shareholder. He also caused a trust deed for the Antalija Unit Trust to be prepared and signed by Antalija No 4 as trustee bearing the date 29 November 2016, although the deed was not signed until February 2017 shortly prior to a certified copy being provided by Mr Katavic to the Commonwealth Bank at which Antalija No 4 had opened a bank account: at J[101], [152]: at J[101].

11. [22]

    The trust deed recited that it was made with the intent that each registered unitholder shall take and hold units in the trust fund on the terms and conditions of the deed (recital D). Clause 2(a) provided that the trust fund shall comprise the initial $100 subscribed by the settlor, Mr Duardo, together with all other monies and property forming part of the trust fund. Clause 2(b) provided:

12. [23]

    Clause 3(a) provided that the trustee shall hold the capital and income of the trust fund upon trust for the registered unitholders in proportion to the number of units held by them. Clause 5 dealing with units, provided by cl 5(a) that the beneficial interest in the trust fund should be divided into units; cl 5(c) provided that all units shall be of equal value; cl 5(d) provided that the beneficial interest in the fund as originally constituted by the sum of $100 paid to the trustee by the settlor shall be divided into 100 Units having an initial value of $1 each which units shall be held subject to the deed by the persons identified in that provision as the registered unitholders of those units; and cl 5(e) provided that as and when any addition is made to the trust fund under cl 2(b), additional units shall be thereupon created.

13. [24]

    The registered unitholders specified in cl 5(d) were:

14. [25]

    Each of those unitholders signed a unit certificate agreeing that their units in the Antalija Unit Trust were held “subject to and with the benefit of the terms and conditions of the said Deed”. Clause 20 provided:

15. [26]

    Clause 11.1(d) conferred on the trustee power to “… mortgage the Trust Fund or any part thereof”.

16. [27]

    In late January 2017, Mr Katavic had a conversation with Mr Cassaniti and Mr Arcidiacono in which he told them he had found two suitable sites for the proposed development and they agreed to continue. In response to Mr Katavic seeking an assurance from Mr Cassaniti that he would have his money for settlement because Mr Katavic had none, Mr Cassaniti replied that he “got it sorted and don’t stress”.

17. [28]

    On 22 February 2017, Antalija No 4 entered into a contract to purchase land at Moncrieff for a price of $4.15 million and a deposit of $415,000. The date for completion was 12 May 2017. The deposit was paid out of the capital contribution of $740,000 made by Ms Price to the Antalija Unit Trust on 21 February 2017 from her self-managed super fund.

18. [29]

    On 14 March 2017, Mr Katavic sent an email to Mr Cassaniti, copied to Ms Katavic and Ms Price, with the subject heading “Cash required – Moncrieff”. After setting out details of the cost of the land purchase and other expenses, such as stamp duty, the email continued (although incorrectly referring to completion on 15 May 2017, rather than 12 May 2017): at J[143].

19. [30]

    His Honour addressed Mr Cassaniti’s involvement in the preparation of the draft unitholders’ agreement (at J[182]-[186]), and dealt with the circumstances in which the unitholders’ agreement was signed by Mr Katavic and Ms Price on 10 May 2017 (at J[187]-[208]). His Honour found that the substantive terms of the unitholders’ agreement were composed by someone unknown, possibly a lawyer employed by Accolade, or more likely some unknown person who was involved with Mr Cassaniti raising the funds to make the necessary payment to Antalija No 4: at J[184].

20. [31]

    After noting Mr Cassaniti’s evidence that he did not read the draft agreement, his Honour continued at J[185]:

21. [32]

    Clause 9 of the draft unitholders’ agreement provided:

22. [33]

    The primary judge described the effect of cl 9(e) (proportionate contributions) and (f) (interest on excess contributions) at J[167]-[169]:

23. [34]

    Mr Katavic gave affidavit evidence that the following conversation took place on 10 May 2017 at Ms Price’s office in Fyshwick (at J[191]):

24. [35]

    Mr Katavic also gave evidence that he flicked through the documents and skimmed over each page, that he did not read each document word by word, but he ran his eye over them, looking for things that stood out as unusual. He said that Mr Cassaniti appeared to be impatient and said on at least two occasions “[h]urry up, I’ve gotta go”: at J[194]. His Honour found that there was no discussion as to what the documents contained, and that Mr Cassaniti accepted that he had not read the unitholders’ agreement: at J[196].

25. [36]

    Ms Price corroborated Mr Katavic’s evidence describing him having “flicked through” the documents and then signed: at J[197]. She gave evidence that in response to Mr Katavic’s question, “[d]o I need to take this and have it looked at?”, Mr Cassaniti replied, “Dennis, it’s just a standard contract. You don’t need to get legal advice”: J[199].

26. [37]

    Ms Price raised with Mr Cassaniti that the document stated that she was a 25 per cent shareholder and said, “[y]ou know I only have $740,000”, to which Mr Cassaniti replied, “I’m looking after you”: at J[198]. In cross-examination, Ms Price gave evidence that Mr Cassaniti answered her question as to whether she needed to have the document looked at and did she need to take it to someone by saying, “[n]o it’s just a simple contract”: at J[201].

27. [38]

    Although Mr Katavic agreed in cross-examination that he knew he had no choice but to sign, if he wanted to get the money from Mr Cassaniti for half the purchase price of the Moncrieff land, his Honour found that it did not follow that Mr Katavic would have signed the unitholders’ agreement “come what may” and irrespective of the contractual obligations that it imposed on him, if he had understood the true effect of its terms: at J[203]-[206]. His Honour also found that Mr Katavic understood that the money he was borrowing from St George Bank would be treated as his contribution to the capital of the Antalija Unit Trust: at J[205].

28. [39]

    His Honour found that Mr Cassaniti arranged for cl 9 to be inserted into the draft unitholders’ agreement (whether of his own motion, or by arrangement with the parties who provided the finance to Mr Cassaniti): at J[361]. Ms Morvillo did not sign the unitholders’ agreement until 24 February 2022, which was during the course of the hearing below: at J[181].

29. [40]

    In March and April 2017, Mr Katavic dealt with Mr Jason Claudianos at St George Bank in relation to borrowing one half of the purchase price of the Moncrieff land. At a meeting on 8 May 2017, Mr Claudianos told Mr Katavic that the bank was not quite ready for settlement. Mr Katavic replied, “I don’t care what you’ve got to do, just get the money”: at J[156].

30. [41]

    On 11 May 2017, St George Bank transferred $2.075 million from the account of Antalija Developments No 2 Pty Ltd (Antalija No 2), a company owned and controlled by the Katavics, to Antalija No 4’s bank account and Accolade transferred $2.25 million to Antalija No 4’s bank account: at J[157], [161]. Mr Katavic checked Antalija No 4’s bank account on 11 May 2017 and saw that the money for settlement had been deposited. His evidence was that he believed that the money included the amount that had been borrowed from St George Bank in accordance with his discussions with Mr Claudianos: at J[162]. Settlement of the purchase of the Moncrieff land occurred on 12 May 2017.

31. [42]

    His Honour found that Mr Katavic did not know that Mr Claudianos had arranged for the payment of the $2.075 million to Antalija No 4 to be made out of an existing facility of Antalija No 2. The consequence was that when Antalija No 2 submitted a progress claim to St George Bank on around 16 May 2017 to draw down on its construction loan facility for another development at Lawson in the ACT, there was an insufficient borrowing limit under that loan facility to pay the progress claim: at J[226].

32. [43]

    On 30 May 2017, after he had checked Antalija No 2’s bank account and noted that the money for the drawdown of the progress claim was not available, Mr Katavic sent an email to Mr Claudianos stating that he was unable to pay the subcontractors for the project on time: at J[225]. On 1 June 2017, St George Bank sent a facility offer to Antalija No 4 as trustee of the Antalija Developments Property Trust No 4 offering a business loan of $2.075 million for the stated purpose of assisting with the purchase of the Moncrieff land for a term of 12 months: at J[227]. A condition of the draw down of the facility was that the proceeds be directed to the construction loan facility in the name of Antalija No 2. A further condition was that security for the facility include a first registered real property mortgage by Antalija No 4 over the Moncrieff land and a guarantee and indemnity from Mr and Ms Katavic. On 7 June 2017, Mr Katavic, on behalf of Antalija No 4 in its own right and as trustee for the Antalija Developments Property Trust No 4 signed the facility offer. He also signed on behalf of Antalija Constructions and for himself, as did Ms Katavic: at J[233].

33. [44]

    On 17 June 2017, Antalija No 4 gave a mortgage over the Moncrieff land securing the loan of $2.075 million to Antalija No 4 as trustee of the Antalija Developments Property Trust No 4. On 22 June 2017, St George advanced $2.075 million to an account styled “AD Property Trust No 4” which amount was immediately transferred to the account of Antalija No 2: at J[245].

34. [45]

    On 24 April 2018, Antalija No 4 entered into a building contract with Antalija Constructions for the construction of the development on the Moncrieff land for a fixed price of $9,134,304: at J[254]. On 14 August 2018, Antalija No 4 in its own right and as trustee for the Antalija Unit Trust accepted a facility offer from St George Bank with a limit of $9.89 million to refinance the existing site finance of $2.075 million and provide construction funding for the proposed development on the Moncrieff land. The facility offer was also signed by Antalija Constructions as guarantor and Mr Katavic, Ms Price and Ms Morvillo as trustee for their respective family discretionary trusts as proportional guarantors: at J[310]. A condition of the facility offer was the provision of a first registered mortgage by Antalija No 4 over the Moncrieff land.

35. [46]

    It is not necessary to summarise the remainder of his Honour’s judgment which dealt with the development of the Moncrieff land, the purported amendment to the development funding agreement, and the matters giving rise to the breakdown in the relationship between Mr and Mrs Katavic and Mr Cassaniti.

The primary judge’s reasons

1. [47]

   The amended cross-claim by Antalija No 4 and Mr Katavic alleged that Mr Cassaniti engaged in misleading or deceptive conduct, as the agent of Ms Morvillo, by representing to Mr Katavic on 10 May 2017 that the draft unitholders’ agreement was a “standard” contract and by failing to specifically bring to Mr Katavic’s attention that the draft contained cl 9(e) and (f). Antalija No 4 and Mr Katavic alleged that these clauses imposed new obligations on the unitholders which had not been the subject of prior discussion, let alone agreement in the sense of a consensus or understanding.

2. [48]

   By reference to what his Honour considered to be the extent of the actual agreement between the parties to the unitholders’ agreement, his Honour found that cl 9 should not be regarded as “standard” or “simple”, at least for the following reasons (at J[378]):

3. [49]

   His Honour concluded that Mr Cassaniti engaged in misleading or deceptive conduct, giving reasons which included:

   1. (1)

      …

   2. (2)

      …

4. [50]

   On the topic of reliance, his Honour concluded at J[400] that Mr Katavic would not have signed the unitholders’ agreement if Mr Cassaniti had explained to him the effect of cl 9:

5. [51]

   His Honour also found that it is not possible on the evidence to make a comprehensive finding as to the alternative course of events that would have occurred in the absence of Mr Cassaniti’s misleading or deceptive conduct: at J[400].

6. [52]

   As to remedy, his Honour concluded that an order should be made under ss 237(1)(a)(i) and 243(a)(ii) of the ACL declaring cl 9(e) and (f) of the unitholders’ agreement to be void ab initio, as a declaration in those terms will have the effect that the unitholders’ agreement will conform with the real agreement between the parties to that document: at J[401]-[403].

7. [53]

   Given the scope of the grounds of appeal, and the application to amend the relief sought on appeal with respect to the breach of trust claim, it is of assistance to refer to his Honour’s summary of the pleadings and the defence to this claim.

8. [54]

   His Honour summarised Ms Morvillo’s initial pleading of the breach of trust claim that had continued relevance (at J[26]):

9. [55]

   His Honour next summarised the relevant allegations in the second further amended statement of claim (at J[32]):

10. [56]

    After summarising the amendments to the breach of trust claim in the third further amended statement of claim (at J[34]), to which it is not necessary to refer, his Honour summarised the respondents’ defence to the breach of trust claim (at J[37]):

11. [57]

    Thus, the parties joined issue on the characterisation of the payment of $2.075 million by Antalija No 2 to Antalija No 4 on 11 May 2027. Ms Morvillo’s case was that this payment was Mr Katavic’s capital contribution to the Antalija Unit Trust. The respondents’ case was that it was not a capital contribution. Ms Morvillo’s alternative case was that if the payment was not Mr Katavic’s capital contribution, then Mr Katavic breached cl 9 of the unitholders’ agreement by not contributing his proportionate share of the capital.

12. [58]

    As to this claim, his Honour found that:

    1. (1)

       although the initial advance of $2.075 million by the St George Bank to Antalija No 4 on 11 May 2017 by drawing down on a facility previously made in favour of Antalija No 2 would appear to be unorthodox, it was apparently done because the Bank had not completed the arrangement which was necessary to offer a new facility to Antalija No 4; and

    2. (2)

       after the settlement of purchase, the St George Bank offered to advance $2.075 million to Antalija No 4 as trustee of the Antalija Developments Property Trust No 4 and it is reasonable to infer that the Bank did not advert to the difference between that trust and the Antalija Unit Trust: at J [237].

13. [59]

    Addressing Ms Morvillo’s reliance on several matters said to be consistent with Mr Katavic having knowingly directed St George Bank to transfer the money from Antalija No 2’s loan facility to Antalija No 4’s bank account (being a statement by Mr Katavic to his solicitor in an email dated 29 November 2019, a journal entry in the MYOB accounts of the Antalija Unit Trust made by Ms Katavic describing the payment from Antalija No 2 as “Dennis’ contributions” and the initial version of the defence filed by the defendants), his Honour found that Mr Katavic’s 30 May 2017 email to the Bank objectively suggested that he was not aware of the true nature of the payment: at J[239]. His Honour continued at J[240]:

14. [60]

    His Honour concluded that the terms upon which Antalija No 4 as trustee of the Antalija Property Trust No 4 borrowed the $2.075 million from St George Bank on the security of the Moncrieff land in June 2017 was not a breach of trust by Antalija No 4, giving the following reasons at J[405]-[412]:

Leave to appeal

1. [61]

   The parties diverged on whether the declaration made on 15 June 2022 is interlocutory, and whether an appeal can be brought with leave against the primary judge’s rejection of the breach of trust claim in the absence of a formal order dismissing that claim.

2. [62]

   Distinguishing between final and interlocutory judgments and orders is often difficult. The test to be applied is whether the judgment or order “finally determines the rights of the parties”: Triden Properties Ltd v Capita Financial Group Ltd [1993] NSWCA 272 at 3 (Clarke JA, Meagher and Sheller JJA agreeing); Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 at [25]. In Singh v Khan [2021] NSWCA 281; (2021) 363 FLR 88 at [27], Brereton JA stated the test as “whether the order is a conclusive declaration of the respective rights and liabilities of the parties”. In applying the test the Court must have regard to the legal rather than the practical effect of the judgment: Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; (1984) 54 ALR 767 at 767-768.

3. [63]

   The appellants say that the declaration finally determined the rights of the parties on the cross-claim, being the terms which govern their bargain, and therefore is unequivocally final, referring to A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701. The respondents say that the declaration is interlocutory because it cannot be viewed in isolation from the case management directions and other orders made by his Honour with respect to the further conduct of the proceedings below on 15 June 2022.

4. [64]

   Viewed by itself and apart from the rest of the judgment, the declaration in par [5] was arguably a final order as it produced a state of finality as to the terms of the unitholders’ agreement. However, the result of the judgment as a whole was that some of the questions in issue in the case were determined and others were not. Where a judgment finally determines some issues, but leaves others unresolved, the judgment is properly classified as interlocutory: Computer Edge v Apple at 768; Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd [2012] NSWCA 61 at [26] (Young JA).

5. [65]

   Applying that test, I incline to the view that the declaration is interlocutory. The whole judgment left undetermined the question whether any, and what, amounts were payable by the trustee to the unitholders or by any unitholders to the trustee, including by way of equitable compensation or upon the taking of accounts if an account was ordered, and what other relief Ms Morvillo was entitled to with respect to the affairs of the trust.

6. [66]

   But nothing turns on this. There are circumstances in which it is appropriate for the interlocutory orders to be challenged before final orders being made: Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104 at [154]-[165] (Ipp AJA, Spigelman CJ and Sheller JA agreeing). An erroneous interlocutory order which allows proceedings to be continued should, if possible, be corrected before the final hearing, in order to prevent unnecessary further expense: WorkPac Pty Ltd v Thearle [2016] NSWCA 303 at [3] (McColl JA, Ward JA and Adamson J agreeing). This a proper case in which the appellants should be granted leave to challenge interlocutory orders. To the extent necessary, there should be a grant of leave to appeal to challenge the declaration.

7. [67]

   As to the second issue, no formal order was made dismissing the breach of trust claim in relation to the giving of security over the Moncrieff land in June 2017. Since an appeal is against judgments or orders not against reasons, the notice of appeal as framed did not permit the appellants to challenge his Honour’s rejection of the breach of trust claim in relation to the giving of security over the Moncrieff land in June 2017: Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 at 64 (Barwick CJ and Kitto J); McGuirk v University of New South Wales (2009) 75 NSWLR 224; [2009] NSWCA 321 at [16] (Basten JA, Ipp and Macfarlan JJA agreeing).

8. [68]

   After this difficulty had been raised by the Court, the appellants belatedly sought leave by an oral application at the hearing to amend the notice of appeal to challenge the case management orders on the basis that his Honour erred in not including in the matters the subject of further evidence and submissions, the alleged breach of trust in giving of security over the Moncrieff land in June 2017.

9. [69]

   The case management orders are interlocutory, and leave is required to challenge these orders. Leave should be granted as sought by the appellants but limited to the alleged breach of trust in relation to the giving of security over the Moncrieff land in June 2017. The reason for this limitation is addressed below when addressing the appellants’ wider application to amend the notice of appeal to include a claim for relief in relation to a new and unpleaded allegation arising from the giving of security over the Moncrieff land in August 2018 in connection with the construction loan: see [184]f.

Issues on appeal

1. [70]

   It is convenient to address the issues on appeal in the following order: (1) the challenge to the findings of misleading conduct, reliance and the grant of relief; (2) the respondents’ notice of contention; (3) the breach of trust claim; (4) the application to amend the notice of appeal; and (5) the disposition of the appeal, including the appropriate relief.

2. [71]

   To the extent that the appellants’ challenged several factual findings, these challenges are conveniently dealt with when addressing the grounds of appeal to which the challenges relate.

3. [72]

   Conduct will be misleading or deceptive if, viewed as a whole, it has a tendency to lead a person into error: ACCC v TPG Internet Pty Limited (2013) 250 CLR 640; [2013] HCA 54 at [39] (French CJ, Crennan, Bell and Keane JJ).

4. [73]

   In this regard, it is first necessary to identify to whom the conduct in question is directed: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 at [102]-[103]; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [36]-[37]. In the present case, the focus of attention is on the impact of the impugned conduct on Mr Katavic being the person alleged to have been led into error by Mr Cassaniti’s conduct, including in his capacity as the sole director of Antalija No 4: Campomar at [100]; Butcher at [37].

5. [74]

   The required analysis is objective: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [102], citing with approval the statement by McHugh J in Butcher at [111]. Whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact to be determined having regard to all the contextual circumstances within which something was said or done: Butcher at [112] (McHugh J). As the plurality in Butcher explained at [37] (Gleeson CJ, Hayne and Heydon JJ), in assessing whether the conduct is misleading, regard must be had to the nature of the parties, the character of the transaction contemplated, the facts that each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.

Was Mr Cassaniti’s conduct misleading or deceptive?

1. [75]

   The appellants rely upon five reasons, which are said to demonstrate error in his Honour’s finding that Mr Cassaniti engaged in misleading or deceptive conduct.

2. [76]

   The first reason is that Mr Cassaniti's conduct was not misleading or deceptive unless the Court also finds that an agreement was in fact reached in November 2016 and his Honour erred in failing to make that finding at J[387] (ground 3). The premise of this complaint is flawed. As the appellants correctly accepted in oral argument, there was no need for there to be a binding agreement in November 2016 for Mr Cassaniti’s conduct to be misleading or deceptive. Moreover, his Honour’s reference at J[387] to an agreement reached in November 2016 is not to be read in isolation from the finding at J[357] that the November 2016 discussion did not give rise to a binding agreement.

3. [77]

   The appellants challenge his Honour’s factual finding at J[357] that although the discussion at the QT Hotel did not give rise to a binding agreement, the agreement matured into a binding one at a later stage by reason of the steps taken by the parties to commit funds to the venture and from the signature of various documents. There was no error in this finding. The documents to which his Honour was referring included the unitholders’ agreement. Further, as his Honour correctly observed, it is possible that the parties did not become bound by all of the written terms of the documents by reason of the circumstances in which they were executed: at J[357].

4. [78]

   The second reason is that his Honour erred in finding at J[395] that Mr Cassaniti misled Mr Katavic by characterising the unitholders’ agreement as either “standard” or “simple” and thereby induced Mr Katavic to believe that the unitholders’ agreement embodied the terms of the “true agreement” they had reached in November 2016 (ground 2).

5. [79]

   It is said that his Honour ought to have found that the evidence did not establish with the required certitude what was said by Mr Cassaniti to Mr Katavic. The short answer is that given the favourable credit and reliability findings in relation to Mr Katavic and Ms Price, it was well open to his Honour to be satisfied based on their evidence that when Mr Katavic asked Mr Cassaniti on 10 May 2017 whether he should arrange for his solicitor and accountant to look at the unitholders’ agreement, Mr Cassaniti responded that the draft unitholders’ agreement was “standard”, as Mr Katavic recalled in his evidence, or “simple” as Ms Price recalled in her evidence. Nothing turns on which descriptor was used by Mr Cassaniti.

6. [80]

   Next, it is said that cl 9 was “standard” in the sense that if Mr Cassaniti (by his nominee, Ms Morvillo) paid more than his proportionate share of capital, he obtained a return of interest on the additional amount. But that characterisation of the unitholders’ agreement ignored the unchallenged findings that cl 9 was inconsistent and materially different to the informal agreement reached in November 2016 and had not been raised before Mr Cassaniti presented the draft unitholders’ agreement for execution. Specifically, there was no agreement or understanding that Antalija No 4 would pay interest at 8.5 per cent per annum compounding annually on any excess contribution, which would be a return in addition to the unitholders’ share of profit: at J[378].

7. [81]

   It is also said that it was not misleading for Mr Cassaniti to propose terms for something that had not been agreed at the November 2016 meeting. I do not agree. The statement by Mr Cassaniti that the unitholders’ agreement was “standard” or “simple” conveyed a message about what the agreement contained. There are unchallenged findings that the unitholders’ agreement contained “unusual terms that imposed high interest obligations on the other parties” (at J[348]) and “inconsistent provisions and imposed different obligations on Mr Katavic and Ms Price to those discussed in the November 2016 meeting” (at J[349]). In the context of Mr Katavic’s question as to whether he should arrange for his solicitor and accountant to look at the unitholders’ agreement, the statement by Mr Cassaniti conveyed the message that the unitholders’ agreement did not contain unusual terms and was consistent with the informal agreement discussed at the meeting in the QT Hotel in November 2016. The representation by Mr Cassaniti was misleading or deceptive.

8. [82]

   The third reason is that the “standard” representation is totally benign (ground 4). That ignores that the conduct of the representor is to be considered in context, not in isolation: Butcher at [39]. Here, the relevant context included the circumstances identified by his Honour at J[348]-[349], namely, (a) Mr Katavic and Ms Price trusted Mr Cassaniti to “document the agreement discussed at the meeting in the QT Hotel in November 2016”; (b) Mr Cassaniti made no attempt to explain to the other parties the effect of the unitholders’ agreement; and (c) Mr Cassaniti put the document in front of the other parties and required them to sign, most probably in a hurry. Again, given that cl 9 was inconsistent and materially different to the informal agreement discussed at the November 2016 meeting, and its effect had not been raised before Mr Cassaniti requested Mr Katavic to sign the unitholders’ agreement, the “standard” representation was not benign.

9. [83]

   The fourth reason is that characterising the unitholders’ agreement as standard or simple was not misleading in circumstances where there was no prior consensus ad idem, Mr Cassaniti gave Mr Katavic the unitholders’ agreement, along with an opportunity to read it, and Mr Katavic used that opportunity to skim the unitholders’ agreement looking for anything unusual and the excess contribution provision in clause 9 was not unusual (ground 5).

10. [84]

    There are two answers to this ground. One is that it is not a defence that Mr Katavic could have discovered the effect of the excess contribution provision in clause 9 if he had taken further steps to ascertain the truth or falsity of the “standard” or “simple” representation: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 2010 CLR 109; [2002] HCA 41 at 121 (Gleeson CJ), 129 (Gaudron, Gummow and Hayne JJ). The other is that Mr Cassaniti was aware that Mr Katavic was relying upon him to advise whether there any unusual term that warranted Mr Katavic obtaining independent accounting and legal advice (at J[389], [399]) and there is no challenge to the finding that Mr Katavic was unaware of the terms of cl 9 prior to signing the unitholders’ agreement.

11. [85]

    The fifth reason is that his Honour erred in his alternative finding at J[399] that Mr Cassaniti misled Mr Katavic as agent of Antalija No 4 by “mere silence” (ground 1). This ground was not mentioned in oral argument and can be taken not to have been pressed. In any event, there was no error by his Honour in making this alternative finding given the findings at J[348], [349], [389], [399]: see [81] and [84] above.

12. [86]

    The challenge to the finding of misleading or deceptive conduct should be rejected.

Reliance

1. [87]

   The appellants challenge in various ways his Honour’s conclusion that Mr Katavic relied on Mr Cassaniti’s representation in signing the unitholders’ agreement.

2. [88]

   First, it is said that his Honour erred in finding at J[389] that Mr Katavic was not experienced in the complexities of commercial transactions (ground 6). This contention relies upon Mr Katavic’s evidence that he was an experienced property developer. But there is no inconsistency between that evidence and the finding at J[389] that Mr Katavic was a builder by occupation who was not experienced in the complexity of commercial transactions and ordinarily relied upon accounting and legal advice. That finding was well-supported by Mr Katavic’s evidence, which his Honour accepted, that he informed Mr Cassaniti of his usual reliance upon professional advice at the time the unitholders’ agreement was signed: at J[389].

3. [89]

   Second, it is said that his Honour erred in finding at J[388] that Mr Katavic was significantly more susceptible to misleading conduct by reason that the parties entered into an informal agreement (ground 7). This finding was based on the unchallenged findings that Mr Katavic let his guard down and was unlikely to adopt a self-defensive approach given the informal way in which in a quasi-family context the parties relied upon trust in each other rather than formal legal advice and documentation: at J[387]. No error has been established in this finding.

4. [90]

   Third, it is said that the direct reliance evidence was weak and unconvincing, and the type of evidence given by Mr Katavic was self-serving. I do not agree. Mr Katavic gave oral evidence-in-chief that he would not have signed the unitholders’ agreement if he had been told that the agreement required him to contribute half of the purchase price of the Moncrieff land or required interest to be paid on contributions. The reasons he gave were rational and credible and were not directly challenged in cross-examination. He said that cl 9 was inconsistent with the arrangement he had discussed with Mr Cassaniti and he had no cash at the time. Mr Katavic adhered to this evidence in cross-examination. He explained that the project would involve approximately two years’ work, that he did not need the work as he had plenty of work on at the time and it would not have been worthwhile. Again, there was no direct challenge to this evidence in cross-examination.

5. [91]

   The appellants also complain that there was no corroboration of Mr Katavic’s evidence that he would have had the chance to borrow against his other properties at 4 per cent interest, rather than pay 8 per cent pursuant to the impugned cl 9. This complaint goes nowhere as no evidence was adduced by the appellants contradicting this aspect of Mr Katavic’s evidence.

6. [92]

   Fourth, it is said that his Honour ought to have found that Mr Katavic would have signed the unitholders’ agreement because he was faced with a binary choice of signing and getting the money or not getting the money. This submission conflates Mr Katavic’s response to the Mr Cassaniti’s misleading conduct with how he would have responded had he known the true position.

7. [93]

   As to the concession by Mr Katavic in cross-examination that he had no choice but to sign if he wanted the funds to complete the purchase of the Moncrieff land, his Honour appropriately took into account that the concession was made in the context that Antalija No 4 could not pay the price on settlement if Mr Cassaniti did not cause Acollade to pay to it the $2.25 million agreed contribution: at J[204]. As his Honour correctly found, it did not follow from the evidence given by Mr Katavic that he would have signed the agreement if he had understood what the true effect of its terms were: at J[205].

8. [94]

   Insofar as his Honour’s finding on reliance was based on his assessment that it would have been out of character for Mr Katavic to have submitted to “commercial blackmail” by Mr Casaniti, the appellants say that it is hardly commercial blackmail to require compensation by way of interest for excess contributions. They submit that weighed against the objective commercial imperatives of the occasion, it is unconvincing that Mr Katavic’s demeanour would have caused him to act contrary to the commercial imperatives.

9. [95]

   A major difficulty with this submission is that it ignores the findings at J[348]-[349] concerning the unusual terms of the unitholders’ agreement which were inconsistent with the agreement discussed in November 2016: see [80] above. If Mr Cassaniti had disclosed to Mr Katavic two days before completion of the purchase of the Moncrieff land that he now required a large portion of his contribution to be treated as a high interest-bearing loan, the trust that underpinned their relationship would have naturally suffered.

10. [96]

    Another difficulty is that it ignores the advantage his Honour had in assessing Mr Katavic’s evidence on the issue of reliance, having seen and heard that evidence. His Honour was entitled to give significant weight, as he plainly did, to Mr Katavic’s evidence as to why he would not have signed the unitholders’ agreement had he known the true position. The finding that Mr Katavic would not have succumbed to commercial blackmail was well-open to his Honour.

11. [97]

    Fifth, it is said that text messages sent to Mr Cassaniti by Mr Katavic on 12 May 2017, to which his Honour did not refer, including thanking him “for everything you have done” reinforce Mr Katavic’s stress that the sale would not complete and his desire to complete the purchase. The 12 May text messages do not undermine the reliance finding. Mr Katavic was ignorant of cl 9 when he sent the messages.

12. [98]

    Sixth, it is said that his Honour erred at J[400] in deciding that he need not speculate what Mr Katavic would have done if the true effect of cl 9 had been explained to him, when Mr Katavic’s pleaded case was that he would not have refused to sign, but would have sought advice before deciding whether to sign (ground 9). This ground does not accurately reflect the pleaded case on reliance which included that Mr Katavic would not have signed the unitholders’ agreement. Unsurprisingly, it was not the subject of written or oral submissions.

13. [99]

    Seventh, it is said that his Honour erred at J[366] in drawing on his own experience as to a builder’s margins as the basis to assess what Mr Katavic would have done had he known the true position (ground 10). Again, no written or oral submissions were advanced in support of this ground. Whilst his Honour found that the builder’s margin of 2.48 per cent allowed in a quantity surveyor’s report dated 4 March 2018 was not a commercial margin (at J[366]), this finding was made in a different context, namely, the discussion in November 2016 that Antalija Constructions’ margin was to be limited to 4 per cent on costs, and whether Mr Katavic was to get substantially the whole of his profit from his holding of 50 per cent of the units in the Antalija Unit Trust. This finding had no relevance for the reliance finding.

14. [100]

    Eighth, it is said that the Court ought to find that in the circumstances of Mr Katavic being an experienced property developer and acknowledging that he had to sign the unitholders’ agreement if he wanted Mr Cassaniti to cause $2.25 million to be paid, Mr Katavic had not proven that he would not have executed the unitholders’ agreement (ground 11). The substance of this ground has been addressed above: at [88]-[96]. Contrary to the appellants’ submissions, his Honour took into account the objective circumstances when assessing Mr Katavic’s evidence on reliance. There was no error in taking into account Mr Katavic’s demeanour when assessing his evidence as to what he would have done had he known the true position.

15. [101]

    The challenge to the finding of reliance should be rejected.

Relief under ss 237, 242, ACL

1. [102]

   The relief granted by his Honour was statutory rescission of part of the unitholders’ agreement, exercising the Court’s power under ss 237(1)(a)(i) and 243(a)(ii) of the ACL. It is convenient to reproduce in full his Honour’s reasons at J[401]-[403]:

2. [103]

   The appellants challenge his Honour’s grant of declaratory relief on three grounds. The first relates to causation. It is said that there is no evidence, and no reasons given, as to whether Mr Katavic and Antalija No 4 “suffered or is likely to suffer loss or damage because of” Mr Cassaniti’s conduct, nor were reasons given explaining how the orders of 15 June 2022 prevented such loss or damage (ground 11). The appellants also complain that the causation point was raised in their submissions at trial but was not addressed by his Honour.

3. [104]

   The second and third reasons challenge his Honour’s exercise of discretion in different ways. It is said that his Honour erred in making the declaration without considering what was required to do justice to Ms Morvillo (ground 12) and in the absence of finding that damages were not an adequate remedy (ground 13).

4. [105]

   It is convenient first to address the causation issue.

Causation

1. [106]

   Section 237 is a discretionary power to make orders which will compensate for loss or prevent or reduce loss: Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) NSWLR 1; [2020] NSWCA 233 at [41] (Leeming JA, Bathurst CJ and Meagher JA agreeing). A claimant for relief under s 237 is required to identify the actual or likely loss or damage caused by the contravening conduct before the Court makes orders under s 237 of the ACL, but it is not necessary to quantify the actual or likely loss or damage: Jonval at [39]. The kinds of relief available under s 237 include a declaration under s 243(a)(ii) of the ACL that the whole or any part of a contract made between a person who has engaged in misleading or deceptive conduct and the injured person is void ab initio.

2. [107]

   The ultimate question in this case is whether Antalija No 4 and Mr Katavic suffered actual or likely loss because of Mr Cassaniti’s contravening conduct. This requires identification of the contravening conduct and of the claimed actual or likely loss, and the establishment of a causal connection between them, which may be provided by reliance: Zong v Wang [2022] NSWCA 80 at [21] (Brereton JA, Leeming and White JJA agreeing). The issue is one of causation, not one of reliance, and reliance is not a substitute for the essential question of causation: Campbell v Backoffice Investments at [143].

3. [108]

   The pleaded loss was the financial detriment to Antalija No 4 and Mr Katavic if Ms Morvillo’s interest claim was successful in the proceedings (amended cross-claim, par 25Q). Although it was not necessary to quantify the likely loss (Jonval at [39]), the quantum was readily apparent from the third amended statement of claim: Ms Morvillo claimed interest of $471,920.22 as 31 January 2022 on her excess contributions.

4. [109]

   In granting relief by way of statutory rescission of cl 9(e) and (f) of the unitholders’ agreement, his Honour did not expressly say that the declaration was made to prevent the actual or likely loss caused by Mr Cassaniti’s contravening conduct. Nevertheless, it is tolerably clear from his Honour’s reasons at J[378] and [402] that he accepted that entry into the unitholders’ agreement containing cl 9(e) and (f) caused loss to Antalija No 4 and Mr Katavic, being the financial detriment to Antalija No 4 of incurring of an expense, and the consequential detriment to Mr Katavic of a reduction in any profit distributed to unitholders.

5. [110]

   There are difficulties with this reasoning. In Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69, the joint judgment of McHugh, Hayne and Callinan JJ said of the question of causation (at [47]-[48] and [51]):

6. [111]

   Addressing the operation of s 87 of the Trade Practices Act 1974 (Cth) (the predecessor to s 237 of the ACL), the joint judgment in Marks said at [54]:

7. [112]

   Gaudron J and Gummow J in separate judgments, although agreeing in the result with the joint judgment in Marks, took a different view on the facts, as did Kirby J in dissent. It is not necessary for the resolution of this appeal to consider the nature or extent of any differences there may be between the separate reasons given in Marks. No argument to that effect was advanced by Antalija No 4 and Mr Katavic.

8. [113]

   Antalija No 4 and Mr Katavic ran a “no transaction” case at trial. The loss caused by Mr Cassiniti’s contravening conduct is said to be the financial detriment occasioned by Mr Cassaniti’s departure from the agreement discussed at the QT Hotel in November 2016. Implicit in the conclusion of this loss is the alternative that Mr Cassaniti would have proceeded with the November 2016 agreement without the unitholders’ agreement. The premise of this counterfactual is that it is reasonable to hold Mr Cassaniti to the November 2016 agreement, even though the informal agreement was not binding.

9. [114]

   As to this, if Mr Katavic had refused to sign the unitholders’ agreement on 10 May 2017 there were three possibilities: (1) the development did not proceed, (2) the development proceeded on the terms of the informal agreement discussed in November 2016, or (3) the parties negotiated different terms of the unitholders’ agreement, for example, a lesser rate of interest on excess contributions or any loan procured by Mr Cassaniti. The issue is consequently to identify the probable counterfactual had the conduct not occurred and it was for Antalija No 4 and Mr Katavic to prove what they would have done: Berry v CCL Secure Pty Ltd (2021) 271 CLR 151; [2021] HCA 27 at [28] (Bell, Keane and Nettle JJ).

10. [115]

    Antalija No 4 and Mr Katavic say that the likely counterfactual is that the development would have proceeded without the unitholders’ agreement; that is, proceeding in accordance with the second of the three possibilities mentioned above. They say that it was not necessary to put the counterfactual to Mr Cassaniti since he did not assert in his defence to the amended cross-claim that he would not have proceeded with the “real agreement” if Mr Katavic did not sign the unitholders’ agreement, and there was no affidavit evidence from him to this effect.

11. [116]

    Ms Morvillo’s response is that this counterfactual is a “different transaction” case which was not pleaded or run at trial, including not put to Mr Cassaniti in cross-examination: Browne v Dunn (1893) 6 R 67. It is said that Antalija No 4 and Mr Katavic should not be permitted to run a new case on appeal as it could have been met by further evidence at trial: Whisprun Pty Ltd v Dixon Pty Ltd (2003) 234 CLR 492; [2003] HCA 48 at [51].

12. [117]

    The parties were given leave to serve supplementary submissions on the issue of whether this new point on appeal should be permitted.

13. [118]

    The question of whether there is procedural unfairness in Antalija No 4 and Mr Katavice advancing a new point on appeal, directs attention to the pleadings and the way the case was run at trial.

14. [119]

    On 10 February 2022, shortly before the commencement of the trial, the appellants obtained leave to file a second further amended statement of claim which introduced the “interest” claim by Ms Morvillo under cl 9(e) and (f) of the unitholders’ agreement. Leave was granted on the basis that Antalija No 4 and Mr Katavic had leave to file an amended cross-claim to join Mr Cassaniti as a cross-defendant and add the misleading or deceptive conduct claim. Leave was also given to adduce supplementary oral evidence from Mr Katavic on the issue of reliance. A draft of the amended cross-claim was before his Honour on 10 February 2022 which pleaded in par 25P (as did the filed document) that Mr Katavic would have obtained advice and would not have signed the unitholders’ agreement if he had known of the impugned clauses.

15. [120]

    The trial commenced on 14 February 2022 and Mr Cassaniti was cross-examined on 15 February 2022 about the meeting that took place on 10 May 2017. It was not put to Mr Cassaniti in cross-examination that he would have proceeded with the development without the unitholders’ agreement. On 24 February 2022, Mr Cassaniti filed his defence to the amended cross-claim (par 25P) in which he denied the pleading of reliance in par 25P of the amended cross-claim filed 22 February 2022, and asserted in support of that denial that the provision of legal advice would not have made a difference. Mr Katavic gave evidence on 2 March 2022, including supplementary oral evidence-in-chief on reliance. Mr Cassaniti did not give further evidence after Mr Katavic had been cross-examined on reliance.

16. [121]

    Antalija No 4 and Mr Katavic say that the counterfactual does not contradict any evidence given by Mr Cassaniti or suggest that any evidence he gave should not be believed and there was no need to cross-examine Mr Cassaniti on the matter because he had not addressed it in his evidence. That submission should be rejected for several reasons.

17. [122]

    First, the submission ignores the pleadings. Antalija No 4 and Mr Katavic did not plead on the issue of causation that Mr Cassaniti would have proceeded with the development without the unitholders’ agreement. Thus, there was no obligation on the appellants to plead in their defence to something not pleaded in the amended cross-claim.

18. [123]

    Second, the submission ignores the way the case was run at trial. Antalija No 4 and Mr Katavic adhered to their “no transaction” case and did not put to Mr Cassaniti in cross-examination that he would have proceeded without the unitholders’ agreement. There was no occasion for Mr Cassaniti to give evidence on this topic in his defence to the amended cross-claim when it had not been raised as an issue either on the pleadings or in earlier cross-examination of Mr Cassaniti.

19. [124]

    Third, it is no answer for Antalija No 4 and Mr Katavic to say, as they do, that any non-compliance with the rule in Browne v Dunn ought to have been raised by the appellants at the trial if there was any perceived unfairness, and, as no point was taken at trial, the opportunity to call Mr Cassaniti (if it were necessary) was lost: Bale v Mills (2011) 81 NSWLR 498; [2011] NSWCA 226 at [65].

20. [125]

    Importantly, the rule in Browne v Dunn had no relevant application at trial. It was unnecessary for Antalija No 4 and Mr Katavic to put the counterfactual to Mr Cassaniti because it was not an issue raised on the pleadings or in evidence; it had nothing to do with the appellants not pleading by way of defence to an unpleaded counterfactual. Since the respondents’ case was a “no transaction” case, there was no occasion for the appellants to complain that a relevant matter had not been put to Mr Cassaniti in cross-examination in breach of the rule in Browne v Dunn.

21. [126]

    Fourth, the absence of evidence from Mr Cassaniti concerning the counterfactual does not permit this Court to conclude that Mr Cassaniti would have proceeded without the unitholders’ agreement. As the appellants correctly submit, that would reverse the onus of proof and would require the appellants to disprove the counterfactual which was not at issue at trial. The appellants did not have an onus to disprove a counterfactual of which they had no notice.

22. [127]

    Further, had Antalija No 4 and Mr Katavic pleaded the counterfactual and adduced evidence on that issue that would have given rise to a significant factual inquiry as to what each of Mr Katavic and Mr Cassaniti would have likely done in the hypothetical circumstances. As indicated, the probable outcome of the hypothetical negotiations is not limited to a binary outcome of “no transaction” or Mr Cassaniti proceeding without the unitholders’ agreement. There are other possible outcomes, including but not limited to a change in the interest rate in cl 9(f). Again, the appellants correctly submit that the lack of evidence from which it can be inferred that one outcome was more probable than the others, together with the way Antalija No 4 and Mr Katavic ran their case, explains his Honour’s conclusion at J[400] that the evidence did not permit a comprehensive finding as to what was likely to have occurred if the true position had been disclosed to Mr Katavic.

23. [128]

    For the above reasons, Antalija No 4 and Mr Katavic should not be permitted to rely on the counterfactual as a new point on appeal. There being no other suggested basis for finding causation, his Honour erred in granting statutory rescission by way of declaratory relief under ss 237(1)(a)(i) and 243(a)(ii) of the ACL. Having regard to this conclusion, it is not necessary to address grounds 12 and 13.

Notice of contention

1. [129]

   By way of a notice of contention the respondents seek to uphold the declaration that cl 9(e) and (f) of the unitholders’ agreement were void ab initio on two grounds: (1) the unitholders’ agreement in its entirety was not binding, and (2) alternatively, the transfer of $2.25 million by Accolade to the Antalija Unit Trust on 11 May 2017 was not a payment by Ms Morvillo as the “Securityholder” referred to in cll 9(e) and (f) of the unitholders’ agreement.

2. [130]

   The appellants correctly complain that these contentions do not seek to support the declaration based on relief for misleading conduct, but instead purport to seek alternative new orders. It is said that if the respondents had filed a notice of cross-appeal, the appellants would have responded with a notice of contention asserting that the primary judge’s findings in respect of the enforceability of the unitholders’ agreement could have been supported by ratification by Ms Morvillo. It is also said that the unitholders’ agreement is binding because Mr Katavic and Ms Price accepted the offer made by Mr Cassaniti on 10 May 2017 to pay the sum of $2.25 million to Antalija No 4 if they executed the unitholders’ agreement.

3. [131]

   At trial, the respondents first raised the “no agreement” case in their closing submissions. The contention advanced was that the unitholders’ agreement did not come into effect or was not binding on the unitholders because the agreement was not signed by Ms Morvillo until 24 February 2022, being after the proceedings had commenced. It was said that it was too late for Ms Morvillo to accept the terms of the unitholder’s agreement at that time.

4. [132]

   Ms Morvillo took a pleading point that this contention had not been pleaded in the respondents’ defence. Ms Morvillo also made substantive submissions as to why this contention should be rejected. It is not said in this Court that Ms Morvillo was prejudiced by the unpleaded “no agreement” case. In my view, it is appropriate to deal with the substance of the respondents’ contention.

5. [133]

   Ms Morvillo points to the unchallenged finding that she was Mr Cassaniti’s nominee (at J[386]), and submits that the correct analysis is that Mr Cassaniti, as principal, made an offer to Mr Katavic and Ms Price on 10 May 2017 that the sum of $2.25 million would be paid to Antalija No 4 for part of the purchase price of the Moncrieff land if the unitholders’ agreement was executed by Mr Katavic and Ms Price, which offer was accepted by Mr Katavic and Ms Price by signing the unitholders’ agreement. It is said that whether Ms Morvillo signed the unitholders’ agreement is irrelevant, as the contract had already been formed when the other unitholders accepted Mr Cassaniti’s offer on 10 May 2017. The appellants’ submission should be accepted. It is a complete answer to ground 1 of the notice of contention.

6. [134]

   Alternatively, the appellants say that Ms Morvillo’s “acceptance” of the unitholders’ agreement was established by performance, which is a sufficient means of demonstrating acceptance of the terms of a written agreement (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535D), or the inferring of such an agreement (Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [81]). The performance relied upon by Ms Morvillo is the provision of the sum of $2.25 million which Mr Cassaniti caused Accolade to make on behalf of Ms Morvillo to Antalija No 4 on 11 May 2017 as Ms Morvillo’s capital contribution to the Antalija Unit Trust. If it were necessary to decide, I would also accept this alternative submission.

7. [135]

   Alternatively, the respondents contend that the transfer of $2.25 million which Mr Cassaniti caused Accolade to make to Antalija No 4 as trustee of the Antalija Unit Trust on 11 May 2017 was not a payment by Ms Morvillo as “Securityholder” and therefore cll 9(e) and (f) of the unitholders’ agreement were not engaged in relation to that payment.

8. [136]

   Again, the appellants take a pleading point. It is not in dispute that the “securityholder” case was not pleaded by the respondents; the point was only referred to in passing in a single dot point in the respondents’ 7-page skeleton of argument in closing submissions. No oral submissions were advanced on the point. Ms Morvillo correctly submits that the respondents should not be permitted to raise a new point on appeal, which could have been met by further evidence at trial: Whisprun Pty Ltd v Dixon at [51].

9. [137]

   In any event, if it was necessary to address the “securityholder” point, it should be rejected. There are unchallenged findings that the sum of $2.25 million was advanced by Accolade, an entity associated with Mr Cassaniti, and Ms Morvillo was Mr Cassaniti’s nominee: at J[402]. Mr Cassaniti accepted in cross-examination that Ms Morvillo did not put up any money and said, “[n]o, I do it for her”. His evidence was not challenged. The contention that there was no evidence that Ms Morvillo made the contribution to the capital of the trust is untenable in light of the objective evidence that a contribution of $2.25 million was made to the trust on behalf of the Cassaniti Discretionary Trust.

10. [138]

    First, the MYOB accounts of Antalija No 4 maintained by Ms Katavic record the $2.25 million as Mr Cassaniti’s contribution, with a memo recording “Sam’s deposit”. That is consistent with Mr Cassaniti being the principal and Ms Morvillo being his nominee. Similarly, the balance sheet of Antalija No 4 as at June 2018 recorded the sum as being “Sam’s contribution”, though the figure is combined with Ms Price’s contribution. Second, the accounts of Antalija Unit Trust, which were given to St George Bank on 22 June 2018, record $2.25 million as being from the Cassaniti Discretionary Trust as a secured loan. Third, the accounts of the Antalija Unit Trust, prepared after the commencement of the proceedings and signed by Mr Katavic and Ms Price, record the money as “beneficiary funds loaned” by the Cassaniti Trust to the Antalija Unit Trust.

11. [139]

    The correct characterisation of the payment of $2.25 million is that it was made on behalf of Ms Morvillo in her capacity as a “Securityholder” referred to in the unitholders’ agreement.

12. [140]

    The respondents’ notice of contention should be rejected.

13. [141]

    The appeal against the declaratory relief granted by his Honour should be allowed and the declaration set aside. In lieu, the amended cross-claim against the appellants should be dismissed.

14. [142]

    The appellants rely upon three related reasons which are said to demonstrate error in his Honour’s finding that the giving of security over the Moncrieff land in June 2017 was not a breach of trust.

15. [143]

    The first reason is that his Honour erred in failing to hold that the sum of $2.075 million was property of the Antalija Unit Trust as it was used to purchase trust property and recorded as a contribution made by Mr Katavic in the books of the Antalija Unit Trust (ground 15).

16. [144]

    The second reason is that his Honour erred in finding at J[407] that the sum of $2.075 million was paid to Antalija No 4 by mistake on the part of the Commonwealth Bank (ground 16). The reference in this ground to the Commonwealth Bank is an error; this ground should be read as referring to a payment by mistake on the part of the St George Bank.

17. [145]

    The third reason is that his Honour erred in finding at J[408] that because the sum of $2.075 million had been paid by mistake, this money did not become property of the Trust (ground 17).

18. [146]

    Ms Movillo contends that this Court ought to hold that:

    1. (1)

       the sum of $2.075 million was property of the Antalija Unit Trust which was paid as Mr Katavic’s proportionate contribution (ground 18); and

    2. (2)

       Mr Katavic and Ms Katavic procured or were knowingly involved in a breach of trust in causing the trustee to borrow $2.075 million and paying that money to Antalija No 2 and accordingly they ought to pay $2.075 million to the trustee of the Antalija Unit Trust as equitable compensation (ground 19).

19. [147]

    As indicated, the appellants did not press the knowing assistance claim against Ms Katavic.

The pleadings and the way the breach of trust case was run at trial

1. [148]

   The starting point is an understanding of the way in which the breach of trust claim was pleaded and run at trial.

2. [149]

   His Honour’s summary of the pleadings has been referred to at [53]-[56] above. In closing submissions at trial, Ms Morvillo contended that (1) the payment of $2.075 million by Antalija No 2 to Antalija No 4 on 11 May 2017 was a “contribution by Dennis”, and (2) the breach of trust involved Antalija No 4 paying to Antalija No 2 on 22 June 2017 the amount of $2.075 million, as the effect of this payment was that Mr Katavic obtained an early return on his contribution of capital to the trust.

3. [150]

   As the argument was put in this Court, the breach of trust claim relies on four essential propositions. First, the payment of $2.075 million to Antalija No 4 on 11 May 2017 was a capital contribution by Mr Katavic. Second and related to the first point, the payment was not made by mistake on the part of the St George Bank. Third, even if the payment was made by mistake, the amount of $2.075 million became an asset of the Antalija Unit Trust. Fourth, it was a breach of trust for Mr Katavic to prefer his own interests to the interests of the other unitholders by causing his capital contribution to be repaid early on 22 June 2017, using the Moncrieff land as security for the June 2017 loan.

The character of the $2.075 million payment

1. [151]

   As to the characterisation of the payment, Ms Morvillo says that the finding at J[378] that Mr Katavic's obligation was to procure a bank loan for half of the price of the development site, which was to be treated “in effect as his contribution”, is to be read as a reference to Mr Katavic’s capital contribution to the Antalija Unit Trust. For the following reasons, that is not a fair reading of his Honour’s reasons.

2. [152]

   First, his Honour was careful not to describe the payment of $2.075 million to Antalija No 4 as a “capital” contribution by Mr Katavic. The reference at J[378] to the payment being “his contribution” is properly understood as a reference to Mr Katavic arranging for the other half of the initial capital to be borrowed from a bank, which his Honour found at J[358] was one of the material features of the informal agreement reached in November 2016.

3. [153]

   Second, contrary to the submission of Ms Morvillo, the finding at J[378] is not in substance in different terms to the finding at J[358] that Mr Katavic would arrange for the other half of the initial capital to be borrowed from a bank and his capital contribution would be deferred to later during the construction phase.

4. [154]

   Third, there is no challenge to his Honour’s finding rejecting Ms Morvillo’s submission that a principal term of the November 2016 agreement was that Mr Katavic would himself contribute half of the initial capital to acquire the proposed development site: at J[362].

5. [155]

   Fourth, characterising the payment as a capital contribution would be inconsistent with the terms of the informal agreement reached in November 2016. That informal agreement recognised that Mr Katavic would not be spared the need to contribute a substantial amount of capital to the proposed development, but by reason of his current shortage of funds, he would make his contribution during the construction phase of the development. His Honour found that Mr Katavic did later make his contribution through Antalija Constructions in the amount of $1.39 million.

The $2.075 million was paid by mistake

1. [156]

   The finding by his Honour that the payment of $2.075 million to Antalija No 4 on 11 May 2017 was made by mistake on the part of the St George Bank was based on an acceptance of Mr Katavic’s evidence that he understood that the advance from St George Bank on 11 May 2017 was a new one made to Antalija No 4 in its own capacity and that he did not learn of the mistake until the Bank failed to pay a progress claim on behalf of Antalija No 2 later in May 2017.

2. [157]

   It was well-open to his Honour to accept Mr Katavic’s evidence on this matter given his favourable credit and reliability finding in relation to Mr Katavic’s evidence. Further, the email which Mr Katavic sent to St George Bank on 30 May 2017 was contemporaneous evidence supporting his Honour’s finding that Mr Katavic did not know that the Bank had arranged for the advance to be made from Antalija No 2: at J[239].

3. [158]

   Nevertheless, Ms Morvillo says that there was objective evidence to the contrary, pointing to seven matters. First, that Ms Katavic who kept the books of Antalija No 4 recorded the sum of $2.075 million as Mr Katavic’s capital contribution, which his Honour found was Mr Katavic’s understanding: at J[205]. Second, that on 20 June 2018 Ms Katavic emailed Mr Cassaniti stating that Mr Katavic “… has so far contributed $3,275,000”, a figure which the appellants say had to include the $2.075 million. Third, that Mr Katavic later wrote to his lawyer, referring to the $2.075 million as “money we took from Antalija No 2 to settle on the land”. Fourth, the initial defence admitted that Mr Katavic caused Antalija No 2 to make the payment to Antalija No 4 of $2.075 million. Fifth, the defence was drafted on clear instructions from Mr Katavic to his solicitor in writing. Sixth, Mr Katavic never told Mr Cassaniti of the mistake. Seventh, Mr Katavic obtained the June 2017 loan secretly.

4. [159]

   It is said that whilst his Honour addressed the first four matters, he failed to mention the last three matters and that undermines the finding that the payment was made by mistake by St George Bank. That complaint should be rejected.

5. [160]

   His Honour addressed the significance of the first four matters: at J[238]-[240]. As to the first two matters, the subjective understanding of Ms Katavic when performing her role as bookkeeper was not determinative of the character of the payment.

6. [161]

   The fifth matter relates to the third and fourth matters concerning the first version of the defence. His Honour acknowledged that the first version of the defence described the payment in a way that was consistent with Mr Katavic having directed St George Bank to draw down on the Antalija No 2 facility but noted that this was later amended to contend that the payment was a mistake: at J[238]. That the instructions were given in writing does not take the matter any further than his Honour’s reasons. Given the contemporaneous evidence of Mr Katavic’s understanding in the email which he sent to St George Bank on 30 May 2017, the later amendment to the defence to contend that the payment was a mistake was explicable.

7. [162]

   As to the sixth matter, Mr Katavic gave evidence that he thought the initial draw down was a clerical error by the Bank and did not assume that he had to say anything. He said, “I thought it was money in, money out”. That Mr Cassaniti was not informed of the Bank’s mistake, which had been quickly regularised by the Bank, does not cast doubt on Mr Katavic’s evidence that the initial draw down was a mistaken payment by the Bank.

8. [163]

   As to the seventh matter, there is no finding that Mr Katavic obtained the June 2017 loan secretly. Nor should this Court make such a finding. That Antalija No 4 would borrow half the purchase price for the development land was a matter which Mr Cassaniti knew from the conversation at the QT Hotel in November 2016.

9. [164]

   Nor was the June 2017 loan kept secret from Mr Cassaniti. He was informed about the bank loan in October 2017 when Mr Katavic’s accountant handed over responsibility for the file to Mr Cassaniti. The accountant stated in an email to Mr Cassaniti, “[w]e had set up Antalija Developments Property Trust No 4 and St George Bank Ltd has lent $2,077,916.36 as at 30 June 2017”. Further, Mr Cassaniti was aware of the June 2017 loan and acquiesced in that debt being refinanced by Antalija No 4 as trustee of the Antalija Unit Trust in August 2018: J[412].

10. [165]

    There was no error in finding that the sum of $2.075 million was paid to Antalija No 4 by mistake on the part of the St George Bank.

The mistaken payment did not become an asset of the trust

1. [166]

   Accepting that the payment of $2.075 million to Antalija No 4 on 11 May 2017 was made by mistake, the payment was not accepted by Antalija No 4 as an asset of the Antalija Unit Trust. As his Honour correctly found, Antalija No 4 did not consent to this payment as an addition to the trust fund for the purposes of cl 2(b) of the trust deed.

2. [167]

   It is said by Ms Movillo that the payment became an asset of the Antalija Unit Trust because it was used to pay part of the purchase price of the Moncrieff land. I do not agree. The correct analysis is as follows. Antalija No 4 was personally liable for liabilities incurred in the authorised conduct of the Antalija Unit Trust, which included liabilities incurred under the contract to purchase the Moncrieff land. Of the credit balance of Antalija No 4’s bank account with the Commonwealth Bank on 11 May 2017, the amount of $2.075 million received on that date from the St George Bank was not trust money but was applied by Antalija No 4 on 12 May 2012 in part payment of the purchase price of the Moncrieff land.

3. [168]

   Having discharged a trust liability partly using its own monies, Antalija No 4 had a right of indemnity by way of reimbursement or “recoupment” from the trust fund in an amount of $2.075 million, and, for the purpose of enforcing the indemnity possessed a charge or equitable lien over those assets: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 at 367; Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20 at [29], [31] (Kiefel CJ, Keane and Edelman JJ), [80] (Bell, Gageler and Nettle JJ).

4. [169]

   Thus, when Antalija No 4 completed the purchase of the Moncrieff land on 12 May 2017 it became the legal owner of that land which it held on trust for the unitholders, subject to a charge or equitable lien over the Moncrieff land to enforce its right of reimbursement in respect of its own contribution to the purchase price of $2.075 million.

No breach of trust in giving security in June 2017

1. [170]

   Accepting that the payment by mistake to Antalija No 4 of $2.075 million on 11 May 2017 was not a capital contribution by Mr Katavic, nor an asset of the Antalija Unit Trust, there is no error in his Honour’s finding that it was not a breach of trust for Mr Katavic to cause Antalija No 4 to obtain the June 2017 loan on security of the Moncrieff land and pay those monies to Antalija No 2 on 22 June 2017.

2. [171]

   First, contrary to Ms Morvillo’s contention, the June 2017 loan was obtained by Antalija No 4 as trustee of the Antalija Developments Property Trust No 4, not as trustee of the Antalija Unit Trust. Hence, the monies the subject of the 2017 loan were never trust monies of the Antalija Unit Trust and no trust monies were “lost” by the Antalija Unit Trust, as asserted by Ms Morvillo, when Antalija No 4 as trustee of the Antalija Developments Property Trust No 4 paid $2.075 million to Antalija No 2 on 22 June 2017.

3. [172]

   Second, as his Honour correctly found, the informal agreement made at the QT Hotel in November 2016 was indefinite as to how Mr Katavic would arrange a bank loan to cover half of the purchase price of the Moncrieff land and the basis on which Mr Katavic would raise the bank loan and secure repayment was left open: J[410].

4. [173]

   Third, when he became aware in late May 2017 that St George Bank had not made a new loan of $2.075 million to Antalija No 4 on 11 May 2017, Mr Katavic arranged for the June 2017 loan to repay Antalija No 2. Mr Katavic did not prefer his own interests by causing Antalija No 4 to give security over the Moncrieff land in respect of the June 2017 loan. Contrary to Ms Morvillo’s contention, the June 2017 loan was not used to repay a capital contribution by Mr Katavic. Rather, the June 2017 loan was the way in which Mr Katavic effectively arranged for a bank loan for half of the purchase price of the Moncrieff land. That St George Bank obtained security over the Moncrieff land for the June 2017 loan was not a breach of trust.

5. [174]

   For completeness it should be noted that when the June 2017 loan was refinanced in August 2018 by Antalija No 4 as trustee of the Antalija Unit Trust upon terms which included the giving of security over the Moncrieff land (see [45] above), Antalija No 4 in its own right recouped the amount of $2.075 million from the trust fund, as it was entitled to do, pursuant to its right of indemnity as trustee in respect of its payment of $2.075 million to the vendor of the Moncrieff land on completion of the purchase on 12 May 2017.

6. [175]

   The appeal against the rejection of the breach of trust claim has not been made out.

7. [176]

   The proposed amendments to the relief sought in the notice of appeal concern two matters: (1) costs issues, and (2) the case management orders for the further conduct of the proceedings.

Costs issues

1. [177]

   By notice of motion filed 2 February 2023, the appellants sought leave in par 5 to add additional claims for relief in the amended notice of appeal against Antalija No 4 and Mr Katavic seeking to restrain them from using trust monies to pay the costs of the appeal or the proceedings at first instance, in the following terms:

2. [178]

   The respondents opposed the proposed amendment to the claims for relief pointing to the limited issues raised by the appeal, the part-heard nature of the proceedings below, and notably, the primary judge has deferred all questions of costs, observing at J[424] that it was premature to determine whether Antalija No 4 ought to be indemnified from the assets of the trust and the amount of any payment that is justified. That approach is consistent with Ludwig v Jeffrey (No 4) [2021] NSWCA 256 at [83] where it was held that the question of the trustee’s right of indemnity in respect of the cost of proceedings commenced or defended by the trustee is to be determined “at the end of the day”.

3. [179]

   Since the assessment of the cost indemnification issues is to occur after the determination of the outstanding matters in the proceedings below, it is unnecessary and inappropriate for this Court to deal with those issues. Leave to amend the notice of appeal to include new pars 8-10 in the claims for relief should be refused.

Breach of trust

1. [180]

   The appellants sought leave orally at the hearing to amend the notice of appeal with respect to the claims for relief by deleting par 3 of the claims for relief, which sought an order that Mr Katavic and/or Antalija No 4 provide an account of the receipts and expenses of the Antalija Unit Trust. In substitution, the appellants seek new orders 14A and 14B and a variation to orders 15-17 made by the primary judge on 15 June 2022 relating to case management and other matters. The proposed amendments as marked up with underlining are:

2. [181]

   The respondents objected to the amendments to the relief sought in the notice of appeal. It is said that the order for an account in pars 14A and 14B is premature given the primary judge’s finding at J[432] that it is not yet clear what issues will arise in the accounting and whether a formal account is necessary and in the interests of the unitholders.

3. [182]

   This objection should be accepted. A claim for the taking of accounts is a claim for equitable relief and the making of such an order is discretionary: Warman International Limited v Dwyer (1995) 182 CLR 544; [1995] HCA 18. In circumstances, where the primary judge has deferred consideration of the grant of such relief, it is not appropriate for this Court to entertain the appellants’ application for an order for the taking of accounts which seeks to pre-empt the decision of the primary judge.

4. [183]

   The respondents further say that the relief sought in par 14B(b) is outside the pleadings and the case ran at trial because there was no case based on an alleged breach of trust by Antalija No 4 in giving security over the Moncrieff land in August 2018 to secure the repayment of the 2017 loan.

5. [184]

   This objection should also be accepted. The pleaded claim only related to the giving of security over the Moncrieff land in June 2017 (pars 91 and 92). The pleaded claim did not include any allegation that the giving security over the Moncrieff land in August 2018 for the construction loan facility was a breach of trust. The case run at trial adhered to the pleaded claim. The breach of trust case outlined at par [40] of the written opening did not include a contention that the refinance of the 2017 loan as part of the August 2018 refinancing was a breach of trust. As the appellants accepted in oral argument at trial, Mr Cassaniti was aware that $2.075 million of the construction loan facility was used to discharge the 2017 loan. In closing written submissions the appellants contended that the breach of trust was Antalija No 4 paying $2.075 million to Antalija No 2 on 22 June 2017. The flaw in this contention has been identified at [166]-[169], [175] above.

6. [185]

   Further, there is no ground of appeal that his Honour erred in not finding that the August 2018 refinancing on the security of the Moncrieff land was a breach of trust insofar as $2.075 million of the amount borrowed by Antalija No 4, was paid to St George Bank in discharge of the 2017 loan.

7. [186]

   The appellants’ oral application to amend the claims for relief in the amended notice of appeal should be refused, except to permit the challenge to the omission in the case management orders of reference to the giving of security over the Moncrieff land in June 2017. For the reasons already given, that challenge to the case management orders should be rejected.

8. [187]

   The appeal has succeeded in part in relation to the misleading conduct claim and otherwise failed in relation to the breach of trust claim. The applications to amend the claims for relief in the amended notice of appeal to include additional matters should be refused, except to permit an amendment to challenge the case management orders insofar as those orders did not include the asserted breach of trust in giving security over the Moncrieff land in June 2017.

9. [188]

   Given the mixed outcome on appeal, the parties should be afforded an opportunity to make submissions on the question of costs in this Court. The question of costs in the underlying proceedings having been deferred by his Honour, no occasion arises to consider the effect of the result on appeal on the question of costs below.

Orders

1. [189]

   I propose the following orders:

   1. (1)

      To the extent necessary, grant leave to appeal against the first and second respondents.

   2. (2)

      The summons seeking leave to appeal against the third respondent is dismissed, with costs.

   3. (3)

      The appellants’ notice of motion filed 2 February 2023 (par 5) is dismissed, with costs.

   4. (4)

      Refuse the appellants’ oral application to amend par 3 of the claims for relief in the amended notice of appeal to include proposed orders 14A and 14B and the reference in order 17 to proposed orders 14A and 14B. Otherwise grant leave to amend the claims for relief in the amended notice of appeal to include in order 17 in substitution for the proposed words “Orders 14A and 14B”, the words “the giving of security over the Moncrieff land in June 2017 as referred to in sub-par (a) of proposed Order 14B”.

   5. (5)

      Appellants to file an amended notice of appeal consistent with order (2) above within 7 days.

   6. (6)

      Appeal allowed in part in relation to the misleading conduct claim.

   7. (7)

      Set aside the declaration made by the primary judge on 15 June 2022 in par 5, and in lieu, dismiss the first and second respondents’ further amended statement of cross-claim filed 22 February 2022.

   8. (8)

      Otherwise dismiss the appeal against the first and second respondents.

   9. (9)

      Dismiss appeal against the third respondent.

   10. (10)

       The appellants to pay the third respondent’s costs of the appeal.

   11. (11)

       Direct the appellants to file and serve short written submissions on the question of costs in this Court within 14 days, the first and second respondents to file and serve their response within a further 14 days, and the appellants to file and serve any reply within a further 7 days. Any such submissions are not to exceed 3 pages. Note that the question of costs in this Court will be determined on the papers.

2. [190]

   KIRK JA: I agree with Gleeson JA.

3. [191]

   ADAMSON JA: I agree with Gleeson JA.